BUSI 1003 Lecture Notes - Lecture 10: Nominal Interest Rate

• School: Carleton University
• Department: Business
• Course: BUSI 1003
• Professor: Patti Proulx

Document Summary

2a, p v =8000; n=5(12)=60; p /y , c /y = 12; i/y = 12% ; i=12% /12=0. 01. S iz e of the periodic payment is . 96. 8,000. 00 interes t of the firs t period = 8000*. 01=80. T he principle repaid in the firs t period = p mt - interes t = 177. 96-80 = . 96. B alance for the firs t period = 8000- 97. 96 = . 04. P /y =1, c y =2; c= 2/12 =2/1; I/y =9% , i=9% /2=0. 045 p = (1+0. 045) ^2 -1= 0. 092025 (a) 4a, 9,600 =p mt (1-1. 092025^-7/0. 092025) S iz e of the periodic payment . 41. 0. 00 interes t paid for the s econd period =. 01. P rinciple repaid for the s econd period =1132. 39. B alance of the s econd period =. 64 (b ) p v =12,500; I/y =7. 1% , i =7. 1% /2=0. 0355; p /y =4, c /y=2 c=2/4=1/2=0. 5; p mt =700. P v =p mt [1-(1+p^-n/p) ] p= (1+. 0355) ^. 05 -1= 0. 017595.