2% interest. How big of a loan can you afford?

Q: Total Debt Service ratio determines your "capacity to repay". What is the maximum % a client should…

A: A loan is a liability which allows a person or entity to get immediate funds for their requirement…

Q: You get a $550,000 mortgage loan with 1¼ points. What dollar amount do you pay for points?

A: One mortgage point equal to 1 % of loan amount.

Q: Consider a mortgage loan where the periodic payment is 1 and the per period mortgage interest is 5%.…

A: Perpetuity can be defined as a cash flow of equal amount at equal intervals of time with out an end.…

Q: You want to buy a $199,000 home. You plan to pay 10% as a down payment, and take out a 30 year loan…

A: Formula; Loan amount = Home value * (1 - Down payment)   Loan amount = $199,000 * (1 - 0.10) Loan…

Q: loan

A: The real interest rate is the rate which shows the preference of the borrower to get the loan at the…

Q: How much of a mortgage could you afford? a.) $224,787.34 b.) $227,478.34 c.) $227,847.25 d.)…

A: PV = P x [1 - {1 / (1 + r)^n}] / r Here, PV = Present Value P = Monthly Payment i.e. $1500 r =…

Q: Calculating finance charges using the discount method and APRon a single-payment loan You are taking…

A: financial charge =p×r×tloan disbursed = principal - financial charge APR=FINANCE CHARGEPRINCIPALN

Q: One year ago, your company purchased a machine used in manufacturing for $100,000. You have learned…

A: The total present value of cash inflows and outflows is known as net present value, or NPV. To put…

Q: Assume the monthly payment of a loan amount of $400,000 is $1450. How long will it take to retire…

A: The loans are paid by the monthly payments and these are fixed and equal types of payments and they…

Q: A friend asks to borrow $54 from you and in return will pay you $57 in one year. If your bank is…

A: Future value of an amount is calculated as follows:  FV = PV*(1+r)t Where,  FV = Future value of…

Q: Suppose a bank offers you an 6 25% interest rate on a 30-year mortgage to be paid back with monthly…

A: Monthly payment (C) = $1700 Monthly interest rate (r) = 0.00520833333333333 (i.e. 0.0625 / 12)…

Q: a long menu of loan options. For each option, there is charged and an interest rate given. The…

A: Lender are not interested in short term because in short term interest rate highly volatile and…

Q: Suppose the interest rate is 4.3%. a. Having $450 today is equivalent to having what amount in one…

A: The money's present value is its current worth compared to some of its potential future value after…

Q: 7. The money required to pay off a fixed-term mortgage is described by the ordinary annuity…

A: The sum borrowed to meet any personal or business requirements is regarded as a loan/mortgage. The…

Q: You can afford a $450 per month car payment. You've found a 3 year loan at 5% interest. How big of a…

A: Personal finance encompasses financial decisions and strategies that individuals make to manage…

Q: If you borrow $6,000 for 4 years and agree to pay back $8000, what simple interest rate will you end…

A: Simple interest is the type of interest that is calculated only on the principal amount. Simple…

Q: You can afford monthly payments of $700. If current mortgage rates are 2.82% for a 15-year fixed…

A: We will have to use and apply the concept of time value of money. The amount that you can afford to…

Q: Find the amount of interest and the maturity value of the following loan. Use the formula MV = P+ I…

A: Rate = 7% + (1/4)% Rate = 7% + 0.25% Rate = 7.25% ----------------------- Years = 4 + (1/2) Years =…

Q: If the effective interest rate is 15%, what nominal rate of interest is charged for a c compounded…

A: Compounding continuously is imaginary situation which actually does not exist in real life…

Q: Given a 5% simple interest rate, how long does it take to double your money?

A: In finance there are two main types of interest rate – simple interest rate and compound interest…

Q: 34. You get a 7.125% mortgage loan with front-end loan charges of $3,800. Will your APR be (a) less…

A: ANNUAL APR =RATE / INITIAL LOAN AMOUNT INITIAL LOAN AMOUNT = LOAN - FRONT END CHARGES…

Q: Find the total installment cost and the finance charge for an installment loan with these…

A: A loan is a financial arrangement in which one or more people, companies, or other entities lend…

Q: 2 (C). You have an outstanding loan currently. The bank requires you to pay in three installments at…

A: Explanation : In the given case, to be indifferent between the two options, the final payoff value…

Q: Not use excel Q)You take out a home loan for $250,000, with an annual interest rate of 6% for 30…

A: Solution:- When a loan is taken, it is to be repaid as a lump sum payment or in installments. When…

Q: monthly

A: I would borrow a loan that is amortized quarterly.   The reason for this is based on the principles…

Q: ? Why? What if the interest rate is 4% (.04)? Explain. (Hint: you can use the formula for a…

A: Option 1: Present value = $850,000 Option 2: Present value = Annuity * [1 - 1 / (1 + rate)^periods]…

Q: Suppose you took out a 20 year mortgage for $280,000 with an APR of 2.772%, but you want to pay it…

A: A mortgage is a loan taken out to purchase or maintain a property. The loan is covered as the…

Q: 3. A. Explain the difference between Installment Loan and Mortgage Loan. B. You are offered a simple…

A: a)- In the lending industry, mortgage loan and Instalment loan are often used alternatively.…

Q: What would the loan payment amount and the interest payed for Kevan’s loan be if the PV=8500,…

A: The term loan payment amount refers to the total amount paid by an individual to pay off the loan…

Q: You have the choice between a 15 year mortgage at 4.5% and a 30 year mortgage at 4.7%, you are…

A: A mortgage is a financial arrangement in which a lender provides funds to a borrower to purchase…

Q: Suppose a bank offers you a 10% interest rate on a 25-year mortgage to be paid back with monthly…

A:

Q: How large a principal can you afford if you are getting a 30 year mortgage at 4% and can afford a…

A: A mortgage is a loan used to purchase a property or real estate. The property serves as collateral…

Q: rest rate is 1.2% per month, what is the APR?   2) Which is better if you’re taking a car

A: APR is annual percentage rate that is interest rate without compouding of interest and APR is much…

Q: 4) You have a $3000 amortized loan that you will make monthly payments of $1200 to pay off (the last…

A: Loan amount = $3000Yearly payment = $1200Interest rate = 7.1%Period = 3 years

Q: a. What interest rate would make it worthwhile to incur a compensating balance of $15,500 in order…

A: The compensating balance is the balance amount of the loan that will be paid to avoid paying a…

Q: aks.1

A: The objective of the question is to calculate the down payment, loan principal and monthly loan…

Q: Suppose that you want to take out a loan and that your local bank wants to charge you an annual real…

A: Compute the nominal interest rate: Nominal interest rate is calculated by using following formula:

Q: Consider a 30-year mortgage with a 5% interest rate and a 20% down payment. If you can afford a…

A: Equivalent Monthly Installment or EMI is the monthly installment of the loan repayment. The amount…

Q: D Question 1 A borrower takes out a 30-year mortgage loan for $350,000 with an interest rate of 2%.…

A: Given:Principal = PV = $350,000Interest rate = rate = 2% per year or 2 / 12 = 0.1667% per monthNo of…

Q: Suppose the interest rate is 4.4%. a. Having $550 today is equivalent to having what amount in one…

A: a. Future Value:Having $550 today is equivalent to having $574.20 in one year at a 4.4% interest…

Q: which formula 2.Jacob borrows $3,000 at 5% exact interest for 540 days. How much does he need to pay…

A: Simple interest is calculated on the principal using the given rate of interest for the required…

Q: reverse annuities, because you get a lump-sum amount as a loan in the beginning, and then you make…

A: A mortgage is a type of loan specifically used to purchase real estate. In a mortgage agreement, the…

Cost of Credit

The cost of credit is an extra amount that the borrower has to pay besides the loan amount. These credit charges may vary from loan to loan. The cost of credit includes interest charges, maintenance charges, and arrangement charges. Some of the costs are mandatorily collected by the lender based on the loan amount and tenure of the loan. The cost of credit is also called finance charges of the credit.