You borrow $1,000,000 at 3% compounded semi-annually and will pay it off over bi-weekly (every two weeks) payments for 25 years. What will your payments be? Note: remember to round interest rates to four positive decimal places, and to round factors to four decimal places. That is our convention in the course. Solution: A=1,000,000(A/P,ibw= (1+.03/2)2/26-1=.001146,N=25*26=650)=1,000,000(.0022)=2200 Note: if you don't round the factor your solution will be 2183.
You borrow $1,000,000 at 3% compounded semi-annually and will pay it off over bi-weekly (every two weeks) payments for 25 years. What will your payments be? Note: remember to round interest rates to four positive decimal places, and to round factors to four decimal places. That is our convention in the course. Solution: A=1,000,000(A/P,ibw= (1+.03/2)2/26-1=.001146,N=25*26=650)=1,000,000(.0022)=2200 Note: if you don't round the factor your solution will be 2183.
Chapter4: Time Value Of Money
Section4.17: Amortized Loans
Problem 1ST
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Transcribed Image Text:You borrow $1,000,000 at 3% compounded semi-annually and will pay it off over bi-weekly
(every two weeks) payments for 25 years. What will your payments be?
Note: remember to round interest rates to four positive decimal places, and to round factors to
four decimal places. That is our convention in the course.
Solution: A=1,000,000(A/P,ibw= (1+.03/2)2/26-1=.001146,N=25*26=650)=1,000,000(.0022)=2200
Note: if you don't round the factor your solution will be 2183.
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