Question

Please answer all parts of problem :)

a) You borrowed $3,000 with "Add-on Interest" at 9% with 12 equal monthly payments to payoff the loan. What is the actual interest rate the lender is charging you in this deal.

Choose the correct answer:

9%

13.51%

12.48%

10.15%

16.22%

b) XYZ Inc entered in a 4 year contract with a client. XYZ will receive following cash flows at the end of each year. If they can earn 6% annual interest, what is the future value of this contract?

0 1 2 3 4

|------------|--------------|---------------|----------------|

0 $800 $1,500 $3,800 $420

Choose the correct answer:

$7,086.21

7,232.87

$6,911.20

$4,521.34

$5,612.94

c) Bank A is offering a loan of $4,000 at 8% interest rate compounded monthly while Bank B is offering $4,000 loan at 7.98% interest rate compounded daily. Which bank should you take the loan from?

Choose the correct answer:

Bank B as it has a lower effective rate of 8.51%

Bank B as it has a lower effective rte of 8.306099%

Both banks have same effective rate so it does not matter which bank you borrow from

Bank A since it has a lower effective rate of 8.299951%

Bank A as the effective rate is lower at 8.51%

d) Jake bought an old car from the used car dealer “reliable autos Inc.” for a price of $8,000. Jake paid $2,000 down payment and financed the remaining amount with loan for seven years and monthly payments of $158.04 at the end of each month. what is the rate of this financing (APR)?

Choose the correct answer:

2.22%

17.39%

15.69%

13.59%

26.59%

Answer #1

1)

**Hence, Actual rate charged is 16.22%**
(1.351%*12)

Please answer all parts of problem :)
a) The best way to describe a primary market transaction will be
which of the following?
Choose the correct answer:
ABC company sold 5000 of its shares in a new stock issue to a
Pension fund directly
Steven sold 1000 shares to his best friend Sally
Susan sold 10,000 shares to her relative
Charles purchased 4000 shares directly from his father
The president of the company sold 3000 of his personal shares to...

You wish to buy a car for $25,000. The dealer offers you a
4-year loan with 2% interest. About what are your monthly payments?
$539.27 $553.36 $542.38 $547.71 Bank A has a 1 year loan for 6%
compounded annually. Bank B has a loan for 5.9% compounded monthly.
Which loan would you select for your business? Bank A: 6% nominal
interest is a better rate than Bank B nominal interest. Bank B:
5.9% nominal interest is a better rate than...

You just bought a new car for $27,718. The car loan contract
specifies that the interest rate on your car loan is 4.5% APR
compounded monthly, your down-payment is $2,718, and the term for
the loan is 5 years. You must make monthly payments on your loan
starting in one month's time. What is the monthly payment?

Your local bank is offering an interest rate of 5.3% APR,
compounded monthly, on a 60-month loan. If all you can pay is $250
per month, what is the maximum loan you can afford to get for a new
car?
PLEASE TRY TO BE A SIMPLE AS POSSIBLE, preferably using
excel!

2. A local credit union is advertising a car loan with
an APR of 6.75%. If interest is compounded monthly,
(a) what is the interest rate per compounding period, and (b) what
is the effective annual interest rate
(i.e., the APY)?
3. Your local credit union is offering a 5.1% APR mortgage with
monthly compounding (i.e., you pay them
once a month). A regional bank nearby is offering a 5.0% APR
mortgage with bi-monthly compounding
(i.e., you pay them twice...

You borrowed $20,000 from a bank at an
interest rate of 12%, compounded monthly.
This loan will be repaid in 60 equal monthly
installments over 5 years. Immediately after
your 30th payment if you want to pay the
remainder of the loan in a single payment, the
amount is close to:

a. The NewLife Insurance Company is offering an insurance policy
that will give you and your offspring $18,000 per year forever. If
you require 6% return on investment the how much would you have to
pay for the policy?
b. If in part a. above the cost of the policy was 360,000 what
would you expect the interest rate to be for this to be a fail
deal?
c. You’re considering to get a loan. Bank A charges 15% annually...

You borrowed $30,000 from your bank to buy a car. The interest
rate is 8%. You amortize the loan over 48 months and you start
paying the loan one month from now. (a) What is the monthly payment
of your loan, (b) What will be your loan balance after 27 months,
(c) How much interest would you have paid in total over the life of
the loan?

You borrowed $206,890 to buy a property and the bank applied an
interest rate of 5.41% p.a compounding monthly. Your loan was
approved over 13 years. Calculate your loan repayments correct to
the nearest dollar (Ignore $ sign and cashflow direction). ?

Please show your steps for each part of the
problem, and if a calculator was used, list the
button combination pressed in order to arrive at
your answer!
a. Jack and Jill are twins and at 20 years of
age they both opened separate investment accounts with an on online
broker. Jack started investing $50 a month starting from today.
Jill will save $55 a month starting at the end of the month. if
this investment account gives them 8%...

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