Reference no: EM132719614

1. Ms. Cressida bought a car for $48,000 exactly three years ago. After making an up-front equity payment of $5,000, she borrowed the rest of the car value from her bank in the form of a five-year loan. She negotiated a loan rate of 2.5% APR with semi-annual compounding. She makes loan payments of an equal dollar amount every two weeks (i.e., biweekly), and her first loan payment was due two weeks after she signed the loan contract. (Show all formulas and calculations)

a) What is the effective annual rate on Cressida's loan?

b) What is the effective biweekly interest rate on Cressida's loan?

c) What is Cressida's biweekly loan payment?

d) What is Cressida's current loan balance?

e) What is the total amount of interest that Cressida would have paid to the bank after five years of loan payments?

f) Prepare an amortization schedule (table) for the first five payments and the last five payments. Round your answers in the table to two decimal places.

Payment Beginning BiWeekly Interest Principal Ending

# Balance Payment Payment Repayment Balance

1

2

3

4

5

126

127

128

129

130