06_65_SOKZAI - $5,000 Component III: PV = C...

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Your Code: SOKZAI Chapter: 6 Problem: 56 Component I: One of your friends told you that he has borrowed $5,000 from a bank, and he has to pay $56 every month back to the bank for next 10 years. Based on the information, you would like to figure out what the APR and EAR of the loan. Component II: -56 -56 -56 -56 -56 -56 0----------1---------2----------3----------4--------------------------119--------120
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Unformatted text preview: $5,000 Component III: PV = C {(1-[1/(1+r)^t])/r} Solving for r , we get: 5000 = 56 {(1-[1/(1+r)^120])/r} r = 0.00516212 or 0.51621246% APR = r 12 = 6.19454947% EAR = (1+ APR/m)^m -1 = (1+.0619454947/12)^12 1 = .06373485 or 6.373485% Component IV: 120 5000-56 N I/Y PV PMT FV 0.51621246...
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This note was uploaded on 05/26/2011 for the course FINA 3000 taught by Professor Laplante during the Spring '08 term at University of Georgia Athens.

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