An Effective Method for Teaching and Understanding ...
Consider a 20-year loan with an effective annual interest rate of 10.25%. If the loan had equal yearly repayments of $5,000, then the present value of the payments (or the principal value currently outstanding) would be calculated as follows. If the loan had equal semiannual payments of $2,500, then we need to use the effective 6-month rate in the calculation and n = 40 semiannual payments ... ................
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