Question

A man borrows $120,000 to buy a home. The interest rate is 4.1%, compounded monthly, and the loan period is 30 years. a) What will be the monthly payment (360 equal payments) for the life of the loan? b) What will be the effective annual interest rate, ieff ? c) How much of the first payment will be interest? d) How much of the fiftieth (50th) payment will be interest? [Try not to put problem on a spreadsheet to find answers. Instead, evaluate how much is still owed at the time evaluated; not at the beginning or end of the loan period. Then you can use the cash flow formulas (F/A, etc.).]

Answer #1

a) interest rate = 4.1%

Monthly interest rate = 4.1/12 = 0.342% = 0.00342 = r

T = 30 years

n = 30*12 = 360 periods

P = 120000

Monthly payment = P r
(1+r)^{n}/((1+r)^{n}-1)

Monthly payment =
(120000*0.00342)(1+0.00342)^{360}/((1+0.00342)^{360}-1)

Monthly payment = 581$

b) Effective annual interest rate = (1+Nominal interest
rate/n)^{n}-1

n = compounding period = 12

Nominal interest rate = 4.1% = 0.041

Effective annual interest rate = (1+0.041/12)^{12}-1

Effective annual interest rate = 1.0418-1 = 0.0418

Effective annual interest rate = 4.18%

c) First payment = 581$

Interest =Principal* interest rate

Principal = 120000

Interest rate = 4.1%/12

Interest rate =120000*4.1%/12

Interest = 410$

A manufacture borrows P2,843,737 with interest at 8%
compounded monthly, and agrees to discharge the loan by a sequence
of equal monthly payments for 5 years with the first payment at the
beginning of the 4th year. Find the periodic payment.
DEFERRED ANNUITY.

A man buys a car for $40,000. If the interest rate on the loan
is 12%, compounded monthly, and if he wants to make monthly
payments of $600 for 60 months, how much must he put down? (Round
your answer to the nearest cent.)

On March 2, 2020, Bob borrows $1325.00 with 11.25% compounded
monthly. If simple interest is used for part of an interest
conversion period, how much is required to settle the debt on July
29, 2024? $

On March 2, 2020, Bob borrows $4025.00 with 12.25% compounded
monthly. If simple interest is used for part of an interest
conversion period, how much is required to settle the debt on July
27, 2025?

Ricky borrows X amount for 30 years at nominal rate of
12% compounded monthly from BANKFB. If he pays the principal as
equal monthly installments for 30 years and on top of this payment,
he pays every month the interest on the outstanding balance.
Immediate after 200th payment, the BANK FB sells the contract on
the future payments to BANK SD at a price of 102,891.65. Find the
value of the initial loan amount X.

A
$280000 mortgage has an interest rate of 12% compounded monthly.
The original amortization period was 10 years. After 5 years how
much of the principal is still outstanding in the mortgage?

Robert borrows $235,000 to purchase a home at an interest rate
of 6% and a term of 30 years.
a) What is the monthly payment on this mortgage?
b) Considering the first month’s payment, how much of the
payment is interest?
c) At the end of the 30 year term, what is the total amount of
interest paid?

a) A person borrows $6650.00 with interest at 15.5% compounded
quarterly for 4 years 7 months. If simple interest is used for part
of an interest conversion period, how much is required to pay off
the debt at the end of 4 years 7 months?
b)A person invests $7500.00 at 6.75% compounded semiannually on
October 1, 2018. If simple interest is allowed for part of an
interest conversion period, how much is the investment worth June
1, 2022?
c) On...

A $10000 loan has an interest rate of 12% per year, compounded
monthly, and 30 equal monthly payments are required.
a) If payments begin at the end of the first month, what is the
value of each payment?
b) How much interest is in the 10th payment?
c) What would you enter into Excel to solve part b?
d) What is the unpaid balance immediately after the 10th
payment?
e) If the 30 loan payments are deferred and begin at...

1. A man has a loan of 50,000 in a bank that gives 12% simple
interest. How much is the interest if he plans to pay after 5
years?
2. A man can save 10,000 per month for 2years, If the bank
offers 5% compounded monthly, what is n?
3. A man has a loan of 50,000 in a bank that gives an interest
rate of 12% compounded quarterly? If he plans to pay after 6months,
how much is the...

ADVERTISEMENT

Get Answers For Free

Most questions answered within 1 hours.

ADVERTISEMENT

asked 1 minute ago

asked 5 minutes ago

asked 13 minutes ago

asked 15 minutes ago

asked 25 minutes ago

asked 28 minutes ago

asked 35 minutes ago

asked 37 minutes ago

asked 39 minutes ago

asked 48 minutes ago

asked 51 minutes ago

asked 52 minutes ago