Suppose You Borrowed $10,000 at an Interest Rate of 12

question 3

Essay

Suppose you borrowed $10,000 at an interest rate of 12%, compounded monthly over 36 months. At the end of
the first year (after 12 payments), you want to negotiate with the bank to pay off the remainder of the loan in 8
equal quarterly payments. What is the amount of this quarterly payment, if the interest rate and compounding
frequency remain the same?

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Definitions:

Unconscionability

Unconscionability involves contract terms that are excessively unfair or oppressive to one party, making enforcement unjust.

Contract Formation

The process by which an agreement between parties becomes legally binding, typically requiring offer, acceptance, consideration, and mutual intent to be bound.

Mirror Image Rule

The mirror image rule is a principle in contract law that requires an acceptance to be on exactly the same terms as the offer in order to result in a binding contract.

Statute of Frauds

A rule of law mandating that some contract varieties must be documented and signed by the involved parties to be legally binding.