37. Annuity Due. (LO5-3) a. If you borrow $1,000 and agree to repay the loan in five equal annual payments at an interest rate of 12%, what will your payment be? b. What will your payment be if you make the first payment on the loan immediately instead of at the end of the first year?

Q: Suppose you borrow $8500 for a term of five years at a simple interest and 8.25% APR. how much is…

A: Interest is the cost of borrowing the money.

Q: 8)Justin is twenty years old and has saved 50,000. He can invest it in a real estate venture that…

A: The worth of a present asset at a point in the future depending on an estimated rate of growth is…

Q: Suppose that you want to avoid paying interest and decide you'll only buy the furniture when you…

A: Monthly payment, M = $110 Annual interest rate, r = 4.7% Term of annuity, t = 2 years

Q: you borrow $2,700 at 8% simple interest per year for five years, how much will you have to repay at…

A: interest =p×r×t100where,r=rate of interestp=principal t=years

Q: You borrow a five-year $13,000 loan with monthly payments of S250. What is the annual percentage…

A: PV = 13000, PMT = -250, N = 5*12, FV = 0 use rate function in Excel monthly rate = 0.48%

Q: (Annuity interest rate) You've been offered a loan of $25,000, which you will have to repay in 5…

A: When the borrower borrows a loan from the lender, he has to pay a rate of interest on the borrowed…

Q: You plan to borrow $48,800 at a 6.5% annual interest rate. The terms require you to amortize the…

A: The objective of the question is to calculate the amount of interest paid in the second year of an…

Q: You have received a settlement from an insurance company which will pay you $100,000 per year for 12…

A: Present Value is the amount of money on hand currently, whereas future value is the amount of…

Q: (Annuity number of periods) How long will it take to pay off a loan of $49,000 at an annual rate of…

A: Compound = Monthly = 12Present Value = pv = $49,000Interest Rate = r = 9 / 12 = 0.75%Monthly Payment…

Q: If you borrow $2800 and agree to repay the loan in 5 equal annual payments at an interest rate of…

A: Using excel PMT function to calculate the yearly payment

Q: Assume that you borrow $5000 and pay back the $5000 plus $250 in interest at the end of the year.…

A: Real interest rate: Principle = $5,000 Interest = $250 Interest rate =  2505,000×100%=5%

Q: You are going to buy a home, and will be taking out a home loan for $275,000. The loan will be a…

A: Amount of home loan is $275,000 Time period is 30 years Interest rate is 7.9% compounded monthly To…

Q: What is the future value of an ordinary annuity that pays $4,600 per year for 4 years? The…

A: Annuity = a = $4600Time = t = 4 YearsInterest Rate = r = 7%

Q: An investor is considering an annuity that pays $40,000 per year for four years.  1. Assuming the…

A: (answer of first 3 parts, please specify if any other part is required) We can compute the present…

Q: Suppose that you want to avoid paying interest and decide you'll only buy the furniture when you…

A: Future value is the compounded value of all future cash flows after the specified period of time and…

Q: 1. A $200 loan is offered with an annual simple interest rate of 6 percent. How much would the…

A: Amount payable = Loan *(1+ interest rate* time period)

Q: [2P2] Directions: Determine the kind of annuity used in the following situations. Then, solve the…

A: Solution:- When an equal amount is paid each period, it is called annuity. Annuity is of two types:…

Q: Suppose you are buying your first condo for $300,000, and you will make a $15,000 down payment. You…

A: The objective of this question is to calculate the monthly mortgage payment for a condo purchase.…

Q: annuity

A: Annuity can be defined as series of payments which are made at regular intervals. Examples of…

Q: a. How much must you deposit annually to accumulate this amount? b. If you decide to make a large…

A: Annual deposit required depends on the future value money and time period and interest rate of the…

Q: You lend a friend $50,000. Your friend will repay you in 6 equal annual end-of-year payments of…

A: Solution:- When an amount is borrowed, it can either be repaid as a lump sum payment or in…

Q: The following loan is a simple interest amortized loan with monthly payments. $155000, 9 1/2%, 30…

A: A type of loan in which the borrower has to make a schedule for the periodic payment regarding both…

Q: The following loan is a simple interest amortized loan with monthly payments. $5000, 7 1/2%, 4…

A: Answer: Principal balance = $ 5000 rate = 7.5% time = 4 years

Q: If you borrow $2,200 and agree to repay the loan in five equal annual payments at an interest rate…

A: Loan means lending money by one or more individuals or organizations to other individuals or…

Q: 4. (a) If you will be making equal deposits into a retirement account for 10 years (with each…

A: An annuity refers to a financial product that provides a fixed sum of money to an individual at…

Q: perpetuity

A: Formula for present value of perpetuity: Present value of perpetuity = PMT/i Where PMT is the annual…

Q: If you borrow $2,900 and agree to repay the loan in six equal annual payments at an interest rate of…

A: a. Present value of payment = Payment *[1-(1+interest rate)^-time period]/rate $2,900=Payment *…

Q: The following loan is a simple interest amortized loan with monthly payments. $5000, 9%, 4 years (a)…

A: Given, The loan amount is $5,000 Rate is 9.50% Term of loan is 4 years

Q: the future value of an ordinary annuity

A: 1. FV of Ordinary Annuity​=C×(1+i)n−1​/i where: C=Cashflow per period i= interest rate n= number…

Q: 4) You receive a 30 year annuity that pays $1,250 at the end of each month for the first year, and…

A: Here we have annuity which is to say we will receive periodic payment. In this question our annuity…

Q: You plan to borrow $46,400 at a 7.6% annual interest rate. The terms require you to amortize the…

A: Loans are paid by the equal annual payments and these payments carry the payment for interest and…

Q: a. What is the present value of a 3-year annuity of $110 if the discount rate is 5%? (Do not round…

A: Annuity means a contract in which the financial institution pays an amount that gives the fixed…

Q: 21. You buy a house for $400,000. You pay off the loan with monthly payments over 30 years at a…

A: Time has been precious in all perspectives, however in terms of finance; the time has a monetary…

Q: 1. You have just purchased a home by borrowing $400, 000 for 30-years at a fixed APR of 3.87%. The…

A: Borrowed amount = $400,000Number of years = 30 yearsFixed APR = 3.87%Number of months in a year = 12

Q: uppose you are going to receive $14,500 per year for five years. The appropriate interest rate is 8…

A: a-1.Periodic payment, P = $14,500Interest rate per period, r = 8%Number of periods, n = 5The…

Q: You are loaned $300 at the end of years 1, 2, and 3. You pay this loan back with payments of X at…

A: Loan is the value which is borrowed from the sources like bank and pay it later with extra amount…

Q: Single-payment loan repayment Personal Finance Problem A person borrows $100 that he must repay in a…

A: As per the time value of money concept, FV=PV∗(1+i)nwhereFV = Future value = Amount due in futurePV…

Q: Calculate the future value of $9,000 invested (single amount) for ten years in an account with an…

A: Information Provided: Present amount = $9000 APR = 6.3% Period of investment = 10 years   NOTE:…

Q: 1.1) For $20,000, you can purchase a five-year annuity that will pay $5000 per year for five years.…

A: Here, Details of 1.1 Present Value (PV) is $20,000 Annuity Payment (PMT) is $5,000 Time Period…

Q: You plan to borrow $47,400 at a 7.5% annual interest rate. The terms require you to amortize the…

A: Solution:When an amount is borrowed, it can either be repaid as a lump sum payment or in…

Q: You plan to borrow $43,100 at an 8.0% annual interest rate. The terms require you to amortize the…

A: Given, Loan amount = $43,100 Annual interest rate (r) = 8% Number of years = 7 Annual equal…

Q: You borrow $22947 to buy a car. You will have to repay this loan by making equal monthly payments…

A: In an annuity payment, the present value of all future annuity payments is calculated using the…

Q: If you borrow $2,400 and agree to repay the loan in four equal annual payments at an interest rate…

A: Given information: Borrowed amount $2,400 Interest rate is 10% Number of periods 4 equal annual…

Amortized Loans

The term "amortization" refers to spreading the value of a loan or a debt over a series of regular payments or installments comprising of both the principal and interest amount. It generally involves the process where in the value of a loan or an intangible asset is written down over its maturity period.