Question

3. a) Consider an annuity of 6 cash flows of $5,000 payable annually. If the interest...

3. a) Consider an annuity of 6 cash flows of $5,000 payable annually. If the interest rate is 7 per cent per annum, what is the value of this annuity today if the first cash flow is to be paid immediately? [8 marks]

3.  b) You are considering the purchase of a home for $700,000. You have available a deposit of $100,000. The bank will lend you money at 7 per cent per annum compounded monthly over a period up to 20 years. If you borrow the required funds over 20 years, what are the monthly repayments? After two years, how much do you still ow the bank? What is the interest component of the 25th repayment? [7 marks]

Business   Finance   
0 0
Add a commentTranscribed image text
Next >

Homework Answers

Answer #1

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
Today, Malorie takes out a 20-year loan of $200,000, with a fixed interest rate of 5.0%...
Today, Malorie takes out a 20-year loan of $200,000, with a fixed interest rate of 5.0% per annum compounding monthly for the first 3 years. Afterwards, the loan will revert to the market interest rate. Malorie will make monthly repayments over the next 20 years, the first of which is exactly one month from today. The bank calculates her current monthly repayments assuming the fixed interest rate of 5.0% will stay the same over the coming 20 years. (c) Calculate...
Sam and Jenny have been married for one year, and are planning to buy a house...
Sam and Jenny have been married for one year, and are planning to buy a house in Sydney for $1 million. They will borrow $700,000 from a bank. The interest rate on the loan is 3.60% per annum, compounding monthly. The loan is for 30 years, and they have to make monthly repayments to the bank, the first payment being exactly one month from today. What is the amount of the monthly repayment? Select one: a. $3,303.78 b. $4,546.45 c....
Today, Malorie takes out a 10-year loan of $200,000, with a fixed interest rate of 5.7%...
Today, Malorie takes out a 10-year loan of $200,000, with a fixed interest rate of 5.7% per annum compounding monthly for the first 3 years. Afterwards, the loan will revert to the market interest rate. Malorie will make monthly repayments over the next 10 years, the first of which is exactly one month from today. The bank calculates her current monthly repayments assuming the fixed interest rate of 5.7% will stay the same over the coming 10 years. (a) Calculate...
suppose that you have just celebrated your 18th birthday today. You decide to start saving money...
suppose that you have just celebrated your 18th birthday today. You decide to start saving money to purchase your first home in 12 years, which will cost $650,000. You aim to save sufficient money to pay the 15% initial deposit, and will take a mortgage to cover the 85% of property cost. The nominal interest rate for the savings account is 13% per annum compounded fortnightly. The nominal interest rate charged by the mortgage provider is 6% per annum compounded...
Annuity Payment and EAR You want to buy a car, and a local bank will lend...
Annuity Payment and EAR You want to buy a car, and a local bank will lend you $30,000. The loan would be fully amortized over 3 years (36 months), and the nominal interest rate would be 6% with interest paid monthly. What is the monthly loan payment? Do not round intermediate calculations. Round your answer to the nearest cent. $   What is the loan's EFF%? Round your answer to two decimal places. %
Today, Malorie takes out a 10-year loan of $200,000, with a fixed interest rate of 4.4%...
Today, Malorie takes out a 10-year loan of $200,000, with a fixed interest rate of 4.4% per annum compounding monthly for the first 3 years. Afterwards, the loan will revert to the market interest rate. Malorie will make monthly repayments over the next 10 years, the first of which is exactly one month from today. The bank calculates her current monthly repayments assuming the fixed interest rate of 4.4% will stay the same over the coming 10 years. (a) Calculate...
Problem 4-8 Annuity Payment and EAR You want to buy a car, and a local bank...
Problem 4-8 Annuity Payment and EAR You want to buy a car, and a local bank will lend you $10,000. The loan would be fully amortized over 5 years (60 months), and the nominal interest rate would be 10% with interest paid monthly. What is the monthly loan payment? Do not round intermediate calculations. Round your answer to the nearest cent. $   What is the loan's EFF%? Round your answer to two decimal places. %
Number of Periods of an Annuity You have $56,827.72 in a brokerage account, and you plan...
Number of Periods of an Annuity You have $56,827.72 in a brokerage account, and you plan to deposit an additional $7,000 at the end of every future year until your account totals $450,000. You expect to earn 10.6% annually on the account. How many years will it take to reach your goal? Round your answer to two decimal places. __________years You want to buy a car, and a local bank will lend you $20,000. The loan would be fully amortized...
7. Calculate annuity cash flows Your goal is to have $20,000 in your bank account by...
7. Calculate annuity cash flows Your goal is to have $20,000 in your bank account by the end of nine years. If the interest rate remains constant at 10% and you want to make annual identical deposits, you'll have to deposit (1,325.53, 1178.25, 1767.37, 1030.97,1472.81, or 1620.09)   into your account at the end of each year to reach your goal. If your deposits were made at the beginning of each year rather than an at the end, the amount of...
Please give me solution and pick from multiple choice   Luke borrows $750,000 from ANZ to set...
Please give me solution and pick from multiple choice   Luke borrows $750,000 from ANZ to set up a medical practice. He agrees to pay a fixed interest rate of 12% per annum compounding monthly and to repay by equal monthly instalments over 25 years. Calculate the monthly repayment and the remaining loan after making 36 monthly repayments. a. The monthly repayment is $7,899.18 and the outstanding is $732,804.53 after making 36 monthly repayments. b. The monthly repayment is $107,103.02 and...
ADVERTISEMENT
Need Online Homework Help?

Get Answers For Free
Most questions answered within 1 hours.

Ask a Question
ADVERTISEMENT