Question

Ms. Maili Sirrus obtained a balloon loan of $235,000 at a nominal rate of interest of 3.35 percent for four years. If repayment is scheduled at the end of every fifth day, obtain the level of the first few payments, assuming he will pay $41,000 at the end of the term.

710.86

716.86

722.86

728.86

Miss Sun Tzi obtained a level principal and interest on the balance loan of $7,541,000. The nominal rate of interest is 0.9% with a term of 5 years and payments scheduled at the end of each day. Compute the interest expense associated with the 11th period.

184.92

188.92

192.92

196.92

Mr. Fernandez has applied for a revolving credit line of $6 million to assist in marketing a new product line. The terms of the loan will be as follows:

(a) All the loans will be discount loans.
(b) A fixed commitment fee of 0.2 percent will be charged.
(c) The compensatory balance requirements will be 10 percent on the total credit line and 8 percent on the outstanding loans.
(d) The bank will pay 0 percent interest on demand deposits.
(e) The rate of interest to be charged will be the prime rate plus 3 percent.
(f) The bank will use the "actual/360" accrual method to compute interest payments.
(g) The credit line will be extended for a period of three years.

The loan officer estimates that Mr. Fernandez will use about 60 percent of the credit line on average. If the prime rate is 10 percent and the required reserve rate on demand deposits is 20 percent, what is the effective cost to Mr. Fernandez?

21.74%

22.14%

22.54%

22.94%

Mr. Fernandez has applied for a revolving credit line of $6 million to assist in marketing a new product line. The terms of the loan will be as follows:

(a) All the loans will be discount loans.
(b) A fixed commitment fee of 0.2 percent will be charged.
(c) The compensatory balance requirements will be 10 percent on the total credit line and 8 percent on the outstanding loans.
(d) The bank will pay 0 percent interest on demand deposits.
(e) The rate of interest to be charged will be the prime rate plus 3 percent.
(f) The bank will use the "actual/360" accrual method to compute interest payments.
(g) The credit line will be extended for a period of three years.

The loan officer estimates that Mr. Fernandez will use about 60 percent of the credit line on average. If the prime rate is 10 percent and the required reserve rate on demand deposits is 20 percent, compute what is the effective yield for the bank?

18.94%

19.34%

19.74%

20.14%

Miss Sun Tzi obtained a level principal and interest on the balance loan of $7,541,000. The nominal rate of interest is 8% with a term of 5 years and payments scheduled at the end of each week. Compute the level principal.

28,943.85

28,963.85

28,983.85

29,003.85

What must be the end-of-the-month mortgage payment amount required to repay a loan of $234,000 in 30 years? Assume k = 0.055 with monthly compounding.

1,248.63

1,288.63

1,328.63

1,368.63

Answer 1

1) Answer : FV of baloon = PV (1+r)^n - P{(1+r)^n - 1} / r (where r = 0.0335/73) 41000 = {235000 (1+ 0.0046)^292} - P{(1+0.0046)^292 - 1} /0.0046 therefor P= 728.86

2) Loan taken $      75,41,000 Payment per period $4,225.77 PMT(0.9%/365,5*365,-7541000) 11th payment: Interest payment $184.95 IPMT(0.9%/365,11,5*365,-7541000) Balance payment $4,040.83 PPMT(0.9%/365,11,5*365,-7541000

6) The present value of an annuity is given as per the formula PV = A[{1-(1/1+r)^n}/r] where PV = 234,000 r = 0.055/12 = 0.004583\ n= 30*12 = 360 A= ? Hence substituting, we get 234,000 = A[{1-(1/1+0.004583)^360}/0.004583] 234000 =A* 166.12176 Hence Annuity = 1328.63