SOLUTION: What is the nominal annual rate of interest compounded quarterly if a loan of $12,500 is paid in six years by payments of $1,000 made at the end of every six months?

Question 1141811: What is the nominal annual rate of interest compounded quarterly if a loan of $12,500 is paid in six years by payments of $1,000 made at the end of every six months?
Answer by greenestamps(13198) (Show Source): You can put this solution on YOUR website!

(1) The standard loan repayment formulas can only be used when the frequency of compounding is the same as the frequency of the payments.

(2) Payments of $1,000 twice a year for 6 years means total payments of $12,000. That is less than the loan amount. The numbers you give don't make any sense.
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