Consider a car Loan of $ 20,000 to be repaid over 5 years in monthly installments. Annual Interest Rate = 6 % all detailed formulas should be shown, Financial Calculator not allowed. a) Calculate the...


Consider a car Loan of $ 20,000 to be repaid over 5 years in monthly installments. Annual Interest Rate = 6 %



all detailed formulas should be shown, Financial Calculator not allowed.



  1. a) Calculate the value of each monthly payment applying the flat rate method.

  2. b) Calculate the value of each monthly payment if interest is declining.

  3. c) Calculate the $ difference of total interest paid during the 5-year period between option (a) and option (b) above.

  4. d) Calculate the EAR for option (a)[flat rate method] and for option (b)[declining interest method]



Jun 09, 2022
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