A twenty-year loan of 25000 is negotiated with the borrower, Ask an Expert

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A twenty-year loan of $25000 is negotiated with the borrower agreeing to repay principal and interest at 5%. A level payment of $1500 will apply during the first ten years, and a higher level payment will apply over the remaining ten years. Each time the lender receives a payment from the borrower, he will deposit the portion representing principal into a sinking fund with an annual effective interest rate of 4%. (This is the amount for replacement capital). What is the lender's yield rate on this entire investment?

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Financial Management, Finance

Category:- Financial Management
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