Question

a) "Clay borrowed $32,000 from a bank at an interest rate of 11.16% compounded monthly. The loan will be repaid in 72 monthly installments over 6 years. Immediately after his 48th payment, Clay desires to pay the remainder of the loan in a single payment. Compute the total amount he must pay."

b) "Suppose that $5,000 is placed in a bank account at the end of each quarter over the next 7 years. What is the future worth at the end of 7 years when the interest rate is 8.2% compounded monthly?"

Answer #1

a). The formula for calculating the fixed monthly payment (P) required to fully amortize a loan of $ L over a term of n months at a monthly interest rate of r is

P = L[r(1 + r)^{n}]/[(1 + r)^{n} - 1].

Here, L = 32000, r = 11.16/1200 = 0.0093 and n = 72. Then P =
32000*0.0093(1.0093)^{72}/[(1.0093)^{72} -1] =
297.60( 1.947420217)/(0.947420217) = $611.72 ( on rounding off to
the nearest cent). Clay has made 48 monthly payments amounting to
48 *611.72= $ 29362.56.

Further, the formula for calculating the remaining loan balance (B) in respect of a fixed payment loan of $ L after p months is

B = L[(1 + r)^{n} - (1 + r)^{p}]/[(1 +
r)^{n} - 1].

Here, p = 48 so that B = 32000[(1.0093)^{72}
–(1.0093)^{48}]/ [(1.0093)^{72} -1] =
32000*(1.947420217-1.559455966 )/( 0.947420217) = $ 13103.85 ( on
rounding off to the nearest cent).

Thus, Clay must pay $ 29362.56+ $ 13103.85 = $ 42466.41.

Please post part b) again separately.

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 man has borrowed $10,000 which he will repay in 60 equal
monthly installments. After his twenty-fifth payment he desires to
pay the remainder of the loan at the time of the 26th payment in a
single payment. At an interest rate of 2% per month what is the
amount of the payment?

Ellen borrowed $25,000 from a loan shark at the APR of 35%,
compounded monthly. The entire amount, principal plus interest, is
to be repaid at the end of five years. This loan shark is not a
nice person and Ellen is a little nervous, so she starts a savings
account in her local bank. The bank pays interest at the APR of 8%,
compounded quarterly. Ellen will make 20 equal quarterly deposits
into her account, then, right after the last...

ABC
Bank made a loan to XYZ, Inc. at a rate of 5.04%, compounded
monthly, payable in equal monthly payments over a 15 year period.
This resulted in a loan payment of $1,585.76, the first payment of
which occurred one month after the loan was issued. XYZ, Inc. made
payments over a period of 7 years and decided to refinance the loan
because of lower interest rates. Assume the refinance was based on
the remaining 8 years of the loan...

You borrowed $1000, $1200, and $1500 from a bank (at 8% p.a.
effective interest rate) at the end of years 1, 2, and 3,
respectively. At the end of year 5, you made a payment of $2000,
and at the end of year 7, you pay off the loan in full. Draw the
CFD for this exchange from your point of view and what is your
payment at EOY 7?

Consider an amortizing loan. The amount borrowed initially is
$21618, the interest rate is 5% APR, and the loan is to be repaid
in equal monthly payments over 17 years. As we know, while each
monthly payment will be the same, the amounts of interest and
principle paid will change from payment to payment. How much of the
very first payment is interest?

John borrowed $84,000 at 9.60% compounded monthly He agreed to
repay the loan in equal monthly payments over a 15 year
amortization term.
(a) What is the size of the monthly payment? Enter answer to 2
decimal places
For parts (b),(c) and (d) DO NOT round the monthly payments
but use exact results as found in your calculator. Nevertheless
enter answers you find in each answer box to 2 decimal
places.
(b) How much of the 22nd payment is interest?...

26.
Sharpe General Stores borrowed $250,000 for 10 years at a 12
percent interest rate, compounded quarterly, and makes an equal
amount of payment at the end of each quarter. What is the loan
balance remaining after the 3rd year?
$47,255
$40,203
$23,420
$29,002
$19,885

A 100,000 loan is being repaid in 360 monthly installments at a
9% nominal annual interest rate compounded monthly. The first
payment is due at the end of the first month. Determine which
payment is the first where the amount of principal repaid exceeds
the amount of interest paid.
266th
267th
268th
269th
270th

Big Brothers, Inc. borrows $242,894 from the bank at 15.15
percent per year, compounded annually, to purchase new machinery.
This loan is to be repaid in equal annual installments at the end
of each year over the next 9 years. How much will each annual
payment be?

ADVERTISEMENT

Get Answers For Free

Most questions answered within 1 hours.

ADVERTISEMENT

asked 11 minutes ago

asked 12 minutes ago

asked 22 minutes ago

asked 23 minutes ago

asked 42 minutes ago

asked 48 minutes ago

asked 49 minutes ago

asked 1 hour ago

asked 1 hour ago

asked 1 hour ago

asked 2 hours ago

asked 2 hours ago