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In part c,how do we calculate the amount to be repaid at the end of each 6 mth period?
Hello again,
In my understanding:
10% loan – Payments are made every six months => equivalent of 5% every six months.
Loan is paid over 5 years so 10 equal payments.
PV of loan at time 0 is $320.000 and we are looking for 10 equal payments (in 10 periods) which include interests.
We can treat this as annuity at 5% over 10 periods:X * 7.722 = $320,000
X = $320,000 / 7.722
X = $41,440
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