A loan will be paid by means of payment of 250 each,every 6 months for 10 years.An interest rate of 5% per year compounded every 6 months will be applicable the present value of the loan is
Solution
Consider,
– The payment per period.
– The principal amount (loan taken).
– The interest rate per year,
– The number of times, the amount is compounded per annum, and
– The number of years,
we can write the formula, as
Replacing the values,
, , (compounded every six months), years
P=3897.290572\
Hence the loan amount to be paid will be
P=3897.290572\
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