(SOLVED) Consider a loan of $17000 with monthly payments of $1100 at a rate of 3.1% compounded semi-annually.

Discipline: Finance

Type of Paper: Question-Answer

Academic Level: Undergrad. (yrs 1-2)

Paper Format: APA

Pages: 1 Words: 158

Question

Consider a loan of $17000 with monthly payments of $1100 at a rate of 3.1% compounded semi-annually.

Calculate how much interest is paid on this loan within the first 7 payments.


Expert Solution Preview


First we need to convert the compounded semi-annually into monthly compounding interest


EAR

3.1000%

Number of times in a year

2



APR

3.0763%

Excel Formula

NOMINAL(0.031,2)



The EAR and APR is found with the help of ..............