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1- What is the effective semiannual interest rate of a loan that is 16% per month compounded
monthly.?
2- What are the monthly payments on a $150000 interest only 20
Solution
Answer 1:
r = 16%
T = 12 months
CP = 1 month
m = 6 months
Effective semi annual rate = i = (1 + r/m)m - 1 = (1 + .16/6)6 - 1 = 0.1710 = 17.1%

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1- What is the effective semiannual interest rate of a loan that is .pdf

  • 1. 1- What is the effective semiannual interest rate of a loan that is 16% per month compounded monthly.? 2- What are the monthly payments on a $150000 interest only 20 Solution Answer 1: r = 16% T = 12 months CP = 1 month m = 6 months Effective semi annual rate = i = (1 + r/m)m - 1 = (1 + .16/6)6 - 1 = 0.1710 = 17.1%