What amortization payment would you need to make each year, at 14% interest compounded semiannually, to pay off a loan of $24,000 in 4 years? (Use Table 12-2 from your text)
A) $5,000.00
B) $4,086.45
C) $4,019.23
D) $954.22

Question

Quizplus · Accepted Answer

The correct payment is calculated using the formula for an amortizing loan with semiannual compounding. The interest rate per period is 7% (14% annual rate divided by 2), and there are 8 periods (4 years times 2). Using the amortization formula or table, the annual payment is $4,019.23.

What Amortization Payment Would You Need to Make Each Year