Quiz part v what is the definition of an apr what

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Unformatted text preview: res the firm to pay $5,000 in principal each year plus interest for that year. interest Click on the Excel icon to see the amortization Click table table 57 Amortized Loan with Fixed Amortized Payment - Example Payment Each payment covers the interest expense plus reduces Each principal principal Consider a 4 year loan with annual payments. The Consider interest rate is 8% and the principal amount is $5,000. interest What is the annual payment? • • • • 4N 8 I/Y 5,000 PV CPT PMT = -1,509.60 Click on the Excel icon to see the amortization table 58 Work the Web Example There are web sites available that can easily prepare There amortization tables amortization Click on the web surfer to check out the Bankrate.com Click site and work the following example site You have a loan of $25,000 and will repay the loan You over 5 years at 8% interest. over What is your loan payment? What does the amortization schedule look like? 59 Quick Quiz – Part VI What is a pure discount loan? What is a good What example of a pure discount loan? example What is an interest-only loan? What is a good What example of an interest-only loan? example What is an amortized loan? What is a good What example of an amortized loan? example 60 6 Formulas End of Chapter 61 61 Comprehensive Problem An investment will provide you with $100 at the end of An each year for the next 10 years. What is the present value of that annuity if the discount rate is 8% annually? annually? What is the present value of the above if the payments What are received at the beginning of each year? are If you deposit those payments into an account earning If 8%, what will the future value be in 10 years? 8%, What will the future value be if you opening the account What with $1,000 today, and then make the $100 deposits at the end of each year? the 62...
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This document was uploaded on 10/01/2013.

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