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1 variable interest rates jodie is a medical student who...

Question: 1 variable interest rates jodie is a medical student who...

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1. Variable Interest Rates Jodie is a medical student who has accumulated 24,000$ of credit card debt on numerous she is offered the following debt consolidation plan: the bank will lend her 24,000s to 1/1/2012, and a payment of 8,000*(1+0.01+Prime Rate on 1/1/2013)S on 1/1/2013. It is the yearly rate for loans to prime borrowers, that is, borrowers who will almost credit cards. She is looking to consolidate her debt. On 1 /1/2010, she visits her bank and pay offall her outstanding credit card balances on that day, in return for a fixed payment of 11,520$ on 1/1/2011, plus a payment of 8,000*(1+0.01+Prime Rate on 1/1/2012)5 on The Prime Rate is a market loan rate that is quoted on all the major financial newspapers. certainly be able to pay back. Assume that the prime rate is 4.25% on 1/1/2012 and 7.50% on 1/1/2013. Compute the yield to maturity for Jodies loan. Assume that the prime rate on 7.50% on 1/1/2012 and 4.25% on 1/1/2013. Compute the yield to maturity on Jodies loan. Provide intuition on how the sequencing of interest payments affects the yield to maturity

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