Question

Five years ago you incurred a 10-year term loan that required
annual payments of $1,150 per year. You have made four payments in
previous years and the fifth payment is due today. The note holder
proposes that you buy back this note today for $4,395. Would it pay
you to borrow the money at the bank at 13% interest rate and buy
back this note (hint: calculate the market value of the loan and
compare with the price for which the bank is willing to sell you
the note)?

Answer #1

Market value of loan at end of year 5 = current payment + [PVA 13%,5 **Amount]

1150+ [3.51723*1150]

1150 + 4044.81

5194.81

since the buyback amount is lower than market value of loan ,loan should be buyback .

Three years ago, you purchased a car and financed your purchase
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$38,857.
$40,000.
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The mortgage on your house is five years old. It required
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had an original term of 30 years, and had an interest rate
of
10%
(APR). In the intervening five years, interest rates have
fallen and so you have decided to
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is, you will roll over the outstanding balance into a new
mortgage. The new mortgage has a 30-year term, requires monthly
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at the first reset if 4%. What will be Lilian's new monthly payment
during 6th year of the loan? Express your answer as a number
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