Karen obtained a $26,000 loan at 4.6% compounded semiannually.


a-1.
What monthly payment will repay the loan in 8 1/2 years? (Do not round intermediate calculations and round your final answer to 2 decimal places.)

Monthly payment $

a-2.
How much interest will Karen pay over the life of the loan

1 answer

1. P = Po(1+r)^n.

r = 0.046/2 = 0.023 = Semi-annual
% rate.

n = 2Comp./yr. * 8.5yrs. = 17 Compounding periods.

P = 26,000(1.023)^17 = $38,270.058.

8.5yrs. = 102 Months.

38,270.058/102 = $375.20/Mo.

2. I = 38,270.06 - 26,000 = $12,270.06.