Answer:

Given information:

• Interest rate per month is 1.25 percent.

a.Nominal interest rate:

Nominal interest rate can be calculated by using the following formula: …… (1)Substitute the respective values in Equation (1) to calculate the nominal interest rate. Hence, the nominal interest rate is percent.

b.Effective interest rate:

Effective interest rate can be calculated by using the following formula: …… (2)Where,

i = Interest rate

n = Time period

Substitute the respective values in Equation (2) to calculate the effective interest rate. Hence, the effective interest rate is percent.

Answer:

Given information:

• Borrowing amount is $20,000.

• Interest rate is 9 percent per year. Hence, monthly interest rate is 0.75 percent.

• Time period is 36 months.

Monthly payment:

Monthly payment can be calculated by using the following formula: …… (1)Where,

i = Interest rate

n = Time period

Substitute the respective values in Equation (1) to calculate the monthly payment. Hence, the monthly payment is .

Interest payment:

Interest payment for 18 th payment can be calculated by using the following formula: …… (2)Substitute the respective values in Equation (2) to calculate the monthly payment. The interest rate payment of 18 is . Hence, option (d) is the correct answer.

Answer:

Given information:

• Monthly compounded interest rate is 1.65 percent.

a.Nominal interest rate:

Nominal interest rate can be calculated by using the following formula: …… (1)Substitute the respective values in Equation (1) to calculate the nominal interest rate. Hence, nominal interest rate is percent.

b.Effective interest rate:

Effective interest rate can be calculated by using the following formula: …… (2)Where,

i = Interest rate

n = Time period

Substitute the respective values in Equation (2) to calculate the effective interest rate. Hence, effective interest rate is percent.