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Home Q & A Board Science-Related Homework Help Mathematics
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majarm majarm
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6 years ago
A variable rate demand loan showed an initial balance of $20 000.00, payments of $5000.00 after six months, $10000.00 after one year, and a final payment after two years. Interest was 6% compounded semi-annually for the first year and 12% compounded monthly for the remaining time. How much was the size of the final payment?
Textbook 
Contemporary Business Mathematics with Canadian Applications

Contemporary Business Mathematics with Canadian Applications


Edition: 11th
Authors:
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#1
6 years ago
Balance after 6 months:
PV = 20000.00; m = 2; i =   = 0.03; n = 1
FV = 20000.00(1 + .03)1 = 20000.00(1.03) = 20 600.00
Balance after 6 months: 20600-5000 = 15 600
Balance after 12 months
 PV = 15600.00; m = 2; i =   = .003; n = 1
FV = 15600.00(1 + .03)1 = 15600.00(1.03) = 16 068.00
Balance after 12 months: 16068-10000 = 6068
Balance after 24 months
 PV = 6068.00; m = 12; i =   = 0.01; n = 12
FV = 6068.00(1 + .01)12 = 6068.00(1 + .01)12 = 6837.57
The final payment is $6837.57.
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