Question

- Skeeter bought a new bass boat for $22,000. He made a $4,000 down payment and financed the remainder at 14.5% for two years with monthly payments. Required:

a. Prepare a loan amortization schedule for the first three payment periods.

b. How much interest will Skeeter pay, assuming he pays the loan off according to schedule?

c. How much will he owe immediately after making the thirteenth (13th) payment

- Daniel is considering an investment that will pay $25,000 per year for ten years, plus $245,000 at the end of the tenth year. The investment costs $315,000. Given a RRR of 15%, evaluate this investment by both the PV and IRR approaches.

- Michael will retire in 16 years. He plans to contribute
**$4,000 per quarter**into an investment account that he expects to earn 8% annually. Upon retirement, he wants to withdraw**$10,000 per month**in annuity form for 20 years.**Will he be able to accomplish his retirement goals?**

There are several ways to approach this problem, but let’s assume you choose to solve for the maximum monthly payments he can withdraw during retirement, and compare that amount to the $10,000 desired withdrawal. Show work and explain.

- A business venture is expected to require a $25,000 outlay at its inception, then to provide positive cash flows as shown below. Given a 16% RRR, is it a good investment?

Year 1 2 3 4 5

Incremental CFAT $12,500 $16,000 $28,600 $25,500 $33,000

- A bond issued by Fortis Corp. will pay the owner $50 every six months for 12 years, plus $1,000 at the end of 12 years. If the appropriate RRR for this bond is 9%, what is it worth?

Answer #1

Amount financed by Skeeter = $22000- $4000 = $18000

Monthly interest rate = 14.5%/12 =0.012083

Monthly installment (A) is given by

A/0.012083*(1-1/1.012083^24) = 18000

=> A =868.49

a) Loan Amortisation schedule is as given below

Period | Loan At beginning of period | Interest on loan | Payment | Loan at end of period |

1 | 18000 | 217.5 | 868.49 | 17349.01 |

2 | 17349.01 | 209.6339 | 868.49 | 16690.15 |

3 | 16690.15 | 201.6727 | 868.49 | 16023.34 |

4 | 16023.34 | 193.6153 | 868.49 | 15348.46 |

b) Total Amount paid on loan = 868.49*24 = $20843.75

So, Interest paid = 20843.75 -18000 =
**$2843.75**

c) Loan Amount after 13th payment = vaue of loan remaining loan (11 payments)

= 868.49/0.012083*(1-1/1.012083^11)

= **$8895.55**

Pablo bought a new Mercedes for $35,000. He put a down payment
of 10% and financed the rest for 4 years at an interest rate of
7.2%
1. What is his financed amount?
2. What is his monthly payment
3. He wants a $450 monthly car payment. Using the same loan
terms, what priced car can he annually afford?
Please show work. Thank you

Person P got a house for $200,000 and made a $60,000
down payment. He obtained a 30 - year loan for the remaining
amount. Payments were made monthly. The nominal annual interest
rate was 6%. After 10 years (120 payments) he sold the house and
paid off the loan’s remaining balance.
(a) What was his monthly loan payment?
(b) What must he have paid (in addition to his regular 120th
monthly payment) to pay off the loan?

Mariam bought a condo for RM 600,000. She made a 10% down payment
and financed the balance through a bank for 35 years.
(a) If the interest rate was 7% compounded monthly, find the
monthly payment that Mariam made to settle the loan.
(b) How much was the total interest charged?
(c) Suppose Mariam missed the first four payments. How much
should be paid on the fifth month if she wanted to settle the
outstanding arrears?
(d) Immediately after paying...

John is considering buying a new car for $20,000 with $4,000
down payment and a 3-year car loan with APR 3.4%. The car's resale
value will be $12,000 at the end of 3 years. The dealership also
offers a lease option with $1000 security deposit which will be
refunded at the end of 3-year lease. The lease monthly payment will
be $300 per month and John could also invest his deposit at 1% in a
saving account. Should John choose...

1. You need a 20-year, fixed-rate mortgage to buy a new home for
$240,000. Your mortgage bank will lend you the money at a 8.1
percent APR for this 240-month loan. However, you can afford
monthly payments of only $900, so you offer to pay off any
remaining loan balance at the end of the loan in the form of a
single balloon payment. Required: How large will this balloon
payment have to be for you to keep your monthly...

You just purchased a $300,000 condo in New York City and have
made a down payment of $60,000. You can amortize the balance at 3%
per annual compounded monthly for 30 years. What are your monthly
payments on the loan?
A. $1000.64
B. $1011.85
C. $1264.81
D. $1317.23
From the previous question #20, what is the balance after the
first payment?
A. $223,659.50
B. $239,588.15
C. $364,266.00
D. None of above

Logan Green decided to build an earth friendly home. He owned
the land, but had to seek financing to cover the cost of
construction. Conglomerate Mortgage Company offered him a
construction loan where no payments were made until one month after
the certificate of occupancy was issued. After that the loan would
convert to a standard 30 year fixed rate mortgage. Logan borrowed a
lump sum of $416100 at 4% per year compounded monthly. Logan
received his certificate of occupancy...

Kelly bought a new SUV for $28,000. She made a down payment of
$13,500 and has monthly payments of $283.72 for 5 years. She is
able to pay off her loan at the end of 36 months. Determine the
total installment price and the finance charge. Once the APR is
determined, use the actuarial method to find the unearned interest
and payoff amount. (Hint: to compute the payoff consider how many
months have been paid by the end of 36...

1) Jens just took out a loan from the bank for 79,702 dollars.
He plans to repay this loan by making a special payment to the bank
of 4,130 dollars in 4 years and by also making equal, regular
annual payments of X for 8 years. If the interest rate on the loan
is 12.57 percent per year and he makes his first regular annual
payment in 1 year, then what is X, Jens’s regular annual
payment?
2) Theo just...

You have approached Commonwealth Bank for a loan to buy a house.
The bank offers you a $500 000 loan, repayable in equal monthly
instalments at the end of each month for the next 30 years.
Required:
a. If the interest rate on the loan is 4.5% per annum, compounded
monthly, what is your monthly repayment (to the nearest
dollar)?
b. What is your weekly payment if you wish to pay weekly
instalments and the interest rate is compounding weekly?...

ADVERTISEMENT

Get Answers For Free

Most questions answered within 1 hours.

ADVERTISEMENT

asked 9 minutes ago

asked 39 minutes ago

asked 53 minutes ago

asked 54 minutes ago

asked 57 minutes ago

asked 1 hour ago

asked 1 hour ago

asked 1 hour ago

asked 1 hour ago

asked 1 hour ago

asked 1 hour ago

asked 1 hour ago