Question

Karmen borrowed $5378.00 compounded semi-annually to help finance her education. She contracted to repay the loan in semi-annual payments of $259.00 each. If the payments are due at the end of every 6 months and interest is 6% compounded semi-annually, how long will Karmen have to make semi-annual payments? State your answer in years and months (from 0 to 11 months) month(s). year(s) and Karmen will have to make payments for

Answer 1

P Pinciple= $ 5378 2-Rale of intereset 6 Gmpourded semiamually 21. Serriammvally O.03 R Seni annual payment=259. Let Karmon pay Ban af kr A, = alane af ter Ist poymont PC1+1)- R A Balamau alter nd paymmt = (PC+)-R)CH) -R semi annual nstallmnt payments PH1)1R(H)1) An 1+i)-R +) = payment R C+ H) An Bhnu ofter nh PCI+2) Thus R (+1 Using P R ond i 5378 (1.03) 6318X08 (1.03)" = 2591.03)- 2 -03) 59 0.03 259 1.032 359-0.03X5378 03" 20 6520 58 m ln 103= Qn 2.6521 .6521 Qn 9.652) en 1.03 32.996999 MR 33 Thus Karmin has to pay 33 Installmonts and 16 5y eau it took 32 yea monthe boy the loam, 16years ond 6 16 yems 6months