Question

Jessica will be receiving $3,600 five years from now. Her desire is to get a loan...

Jessica will be receiving $3,600 five years from now. Her desire is to get a loan today and then repay it in one lump sum when she receives her funds. What is the maximum loan Jessica can get today if the bank charges 8.5% interest?

a. $2,433.86

b. $2,416.36

c. $2,501.08

d. $2,394.16

e. $2,357.10

Business   Finance   
0 0
Add a commentTranscribed image text
Next >

Homework Answers

Answer #1

- Jessica will receive amount 5 years from now(Future Value) = $3600

Jessica will take a loan to pay it as a lump using tthe amount received in 5 years.

Calculating the maximum loan amount that Jessica can get:-

where, r = Interest rate = 8.5%

n = no of years = 5

3600 = Loan Amount*1.50365669018

Loan Amount = $2394.16

hence, Option D

If you need any clarification, you can ask in comments.     

If you like my answer, then please up-vote as it will be motivating

0 0
Know the answer?
Your Answer:

Post as a guest

Your Name:

What's your source?

Earn Coins

Coins can be redeemed for fabulous gifts.

Log In

Sign Up

Not the answer you're looking for?
Ask your own homework help question
Similar Questions
Suppose that you desire to get a lump-sum payment of $100,000 three years from now. Instructions:...
Suppose that you desire to get a lump-sum payment of $100,000 three years from now. Instructions: Round your answer to the nearest dollar. How many current dollars will you have to invest today at 10 percent interest to accomplish your goal? $.
Shelley wants to cash in her winning lottery ticket. She can either receive five, $202,000 semiannual...
Shelley wants to cash in her winning lottery ticket. She can either receive five, $202,000 semiannual payments starting today, or she can receive a lump-sum payment now based on a 6% annual interest rate. What is the equivalent lump-sum payment?
2. Your child is about to enter college a year from now. A local foundation provides...
2. Your child is about to enter college a year from now. A local foundation provides scholarships (essentially interest-free loans) each year perpetually for students. Your child has won the scholarship just now. When your child joins college, he/she would receive a scholarship of $ 10,000 per year annually for 4 years. Your child is expected to repay the scholarship amount of $ 40,000 in 15 equal yearly installments, interest-free beginning a year after the expiration of his/her scholarship. The...
A small business owner visits her bank to ask for a loan. The owner states that...
A small business owner visits her bank to ask for a loan. The owner states that she can repay a loan at $900 per month for the next two years and then $1,800 per month for three years after that. If the bank is charging customers 8.5 percent APR, how much would it be willing to lend the business owner? (Round your answer to two decimal places.)
Your child is about to enter college a year from now. A local foundation provides scholarships...
Your child is about to enter college a year from now. A local foundation provides scholarships (essentially interest-free loans) each year perpetually for students. Your child has won the scholarship just now. When your child joins college, he/she would receive a scholarship of $ 10,000 per year annually for 4 years. Your child is expected to repay the scholarship amount of $ 40,000 in 15 equal yearly installments, interest-free beginning a year after the expiration of his/her scholarship. The foundation...
1. Holly just borrowed 68,157 dollars from the bank. She plans to repay this loan by...
1. Holly just borrowed 68,157 dollars from the bank. She plans to repay this loan by making equal quarterly payments for 10 years. If the interest rate on the loan is 10.96 percent per year and she makes her first quarterly payment in 3 months from today, then how much must Holly pay to the bank each quarter?
Genna is 60 years old and is bargaining with her employer over deferred compensation. In exchange...
Genna is 60 years old and is bargaining with her employer over deferred compensation. In exchange for reducing her current year’s salary by $50,000, she can receive a lump-sum amount in 5 years, when she will retire. If she receives the $50,000 in the current year, she will invest in certificates of deposit that yield 5%. Genna is in the 28% marginal tax bracket in all relevant years. What is the minimum amount Genna should accept as a deferred pay...
Ellen borrowed $25,000 from a loan shark at the APR of 35%, compounded monthly. The entire...
Ellen borrowed $25,000 from a loan shark at the APR of 35%, compounded monthly. The entire amount, principal plus interest, is to be repaid at the end of five years. This loan shark is not a nice person and Ellen is a little nervous, so she starts a savings account in her local bank. The bank pays interest at the APR of 8%, compounded quarterly. Ellen will make 20 equal quarterly deposits into her account, then, right after the last...
Alma wants to have $20,000 in her investment account ten years from now. Currently, she has...
Alma wants to have $20,000 in her investment account ten years from now. Currently, she has nothing saved. How much would she have to deposit today to reach her goal if this is the only amount she invests? She expects to earn 8.5 percent, compounded annually. How much must she deposit today?
3-part question. Five years from now you would like to have $25,000 for a down payment...
3-part question. Five years from now you would like to have $25,000 for a down payment on a home. Assuming you could earn 9% interest, how much money would you need to invest today as a lump sum to meet your goal? How much money would you have to invest at the end of each year to meet your goal? How much would you need if you invested the payments at the beginning of each year with the first payment...
ADVERTISEMENT
Need Online Homework Help?

Get Answers For Free
Most questions answered within 1 hours.

Ask a Question
ADVERTISEMENT