Question

Your friend will loan you the money you need today if you agree to make payments of $110 a month for the next 18 months. The friend requires that the first payment be made today (i.e. immediately after the loan amount is disbursed). The friend charges you interest at 21.00% compounded semi-annually. How much money are you borrowing today?

Question 3 options:

$1,725

$1,768

$1,811

$1,854

$1,898

Answer #1

We need to calculate the present value of immediate annuity. Following is the formula for the same:

Where,

- PMT =
**$110 (per month)** - Interest, r = 21% PA =
**1.75% (per month)** - Tenure, n =
**18 months**

Putting the values in the formula, we get:

Hence, the money borrowed today is **$1,725.**

**The correct answer is Option A ($1,725).**

You need some money today and the only friend you have that has
any is your miserly friend. He agrees to loan you the money you
need, if you make payments of $15 a month for the next nine months.
In keeping with his reputation, he requires that the first payment
be paid today. He also charges you 2% interest per month. How much
money are you borrowing?
$135.00
$122.43
$126.49
$124.88
$120.67
??

You raise some money today from your friend. He agrees to loan
you the money you need, if you make payments of $40 a month for the
next one year. In keeping with his reputation, he requires that the
first payment be paid today. He also charges you 2 percent interest
per month. How much money are you borrowing?
ADue PV =

-You have offered your friend a $15,000 loan with 7% simple
interest per year for 8 years. How much interest will you earn on
the loan?
-You are earning interest on money in your bank account at a
rate of 4% compounded annually. If you deposit $7,000 in the
account for 7 years, how much ineterst will you earn?
-You need $21000 to purchase a really sweet Honda Civic. You
negotiate a loan with the bank of Mom and Pop...

6. You loan some money to a friend and he agrees to pay
you $200 at the end of each month for the next 2.5 years. Using a
rate of 6.3%/year, calculate what this stream of anticipated
payments from your friend is worth in today’s dollar terms. In
other words, if your friend promises to make these payments, what
would be a fair amount to loan to him today?

A friend wants to borrow money from you. He states that he will
pay you $3,800 every 6 months for 13 years with the first payment
exactly 6 years and six months from today. The interest rate is 6.1
percent compounded semiannually. What is the value of the payments
today?

You borrow $100,000 today. You will repay the loan with 20 equal
annual payments starting in year 3 If the interest rate on the loan
is 5% APR, compounded annually, how big is each payment?

A friend wants to borrow money from you. He states that he will
pay you $3,400 every 6 months for 9 years with the first payment
exactly 7 years and six months from today. The interest rate is 5.7
percent compounded semiannually. What is the value of the payments
today?
$32,128.58
$33,021.49
$35,079.17
$31,070.77
$31,956.28

Solve using excel
You give a loan to your friend to buy equipment for his
business. The friend puts $4000 of their own money as a down
payment, you lend them $12,000. The equipment is $16,000 total. You
will charge your friend 4.0% Interest every year and will collect
monthly payments for 60 months. Inflation is 1.7% per year,
constant for 5 years.
a.) What is the NPV of the loan assuming it is paid each month
on time?
b.)...

Your grandfather has left for you in his will a large sum of
money. Unfortunately, rather than giving you this money
immediately, he has instructed the trustee to first pay you $8,870
in one year. This payment is to grow by 5.75% each year and to be
made annually forever. If the appropriate discount rate is 7.75%
compounded monthly, how much have you actually inherited today?
Question 20 options:
$369,373
$379,093
$388,813
$398,534
$408,254

Use an Excel worksheet to answer the following five car loan
problems
you borrowed money from your local bank to purchase a car. The
bank requires you to repay the loan over 48 months and charges a
fixed, annual interest rate of 6 percent. The amount of your loan
is $25,000
a,How much will your loan payment be each month?
b,How much of the first loan payment will go toward
principal?
c,How much interest will you pay during the 1st...

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