Suppose you have $250,000 of loan. The terms of the loan are that the yearly interest is
Question:
Suppose you have $250,000 of loan. The terms of the loan are that the yearly interest is 6% compounded quarterly. You are to make equal quarterly payments of such magnitude as to repay this loan over 30 years.
(Keep all your answers to 2 decimal places, e.g. XX.12.)
(a) How much are the quarterly payments? Ans: 4504.63
(b) After 5 years' payments, what principal remains to be paid? Ans: 232550.19
(c) How much interest is paid in the first quarter of the 6th year? Ans: 3488.25
(d) How much is the total interest paid over the 30 years? Ans: 290555.60
(e) If you have a lump sum payment of $20,000 at the end of 5 years, and maintain the same level of quarterly payment, when will you pay off your loan, i.e. how many years in total will you pay off the loan?
Expert Answer:
