Tuesday, August 9, 2011

Finite Math amortization schedule help?

Starting on July 1, 2000, Peter borrows each year for 4 years from his dear Aunt May to pay for college. (Note: the last date that he borrows money is July 1, 2003.) From the beginning, Aunt May agreed to defer all interest on the loans until Peter finds a job; i.e. Peter's loans will not accumulate any interest until the first day he starts working. After that, Peter will be charged 7.4 percent compounded semiannually, and he will pay Aunt May back with 18 equal semiannual payments, the first coming 6 months after he starts his job. Peter finds a job as a photographer for a local newspaper, and his first day of work is July 1, 2004. For tax reasons, Peter needs to know the following: What is the total amount of interest that Peter will pay to Aunt May in the year 2007? (i.e. add up the interest from the two payments that he'll pay that year)

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