3. Suppose you recently bought a house for R1 650 000 and secured a home loan from the bank, with an interest rate of 9% per annum (compounded monthly) for a 20-year (240-month) term. You are obligated to make equal monthly payments, and your first payment is due in one month's time. However, after reviewing the bank's repayment calculation, you realize that you can afford to pay R1 000 more each month. How many months less will it take you to repay the home loan if you consistently make an additional monthly payment of R1 000. You may assume that the interest rate will remain fixed over the term of the home loan. a) 203.24 months b) 0.24 months c) 36.76 months d) 60.10 months e) None of the above the purchase
3. Suppose you recently bought a house for R1 650 000 and secured a home loan from the bank, with an interest rate of 9% per annum (compounded monthly) for a 20-year (240-month) term. You are obligated to make equal monthly payments, and your first payment is due in one month's time. However, after reviewing the bank's repayment calculation, you realize that you can afford to pay R1 000 more each month. How many months less will it take you to repay the home loan if you consistently make an additional monthly payment of R1 000. You may assume that the interest rate will remain fixed over the term of the home loan. a) 203.24 months b) 0.24 months c) 36.76 months d) 60.10 months e) None of the above the purchase
Essentials Of Investments
11th Edition
ISBN:9781260013924
Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Chapter1: Investments: Background And Issues
Section: Chapter Questions
Problem 1PS
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Transcribed Image Text:3.
4.
Suppose you recently bought a house for R1 650 000 and secured a home loan
from the bank, with an interest rate of 9% per annum (compounded monthly) for a
20-year (240-month) term. You are obligated to make equal monthly payments, and
your first payment is due in one month's time. However, after reviewing the bank's
repayment calculation, you realize that you can afford to pay R1 000 more each
month.
How many months less will it take you to repay the home loan if you consistently
make an additional monthly payment of R1 000. You may assume that the interest
rate will remain fixed over the term of the home loan.
a) 203.24 months.
b) 0.24 months
c) 36.76 months
d) 60.10 months
e) None of the above
Nombulelo Makwete has been shopping around for a loan to finance the purchase
of a used car she is buying. She needs to borrow R205 000. She found four offers
that seem to be attractive, but would like to choose the offer with the lowest annual
interest rate. The information she was provided by the banks were as follows:
Loan
A
B
C
D
a) Loan A
b) Loan B
c) Loan C
Principle
amount
d) Loan D
e) None of the above
R205 000,00
R205 000,00
R205 000,00
R205 000,00
Monthly
payment
-R9 842,64
-R7 207,19
-R5 448,90
-R4 169,49
You may assume that the interest on all four loans above are compounded monthly.
Which loan should Nombulelo take if she wants to choose the loan with the lowest
annual interest rate?
2
Repayment
term
(months)
24
36
48
72
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