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?
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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):
(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.
