4.44 The Fairfold family decided to buy a super ski and water sports boat. They took out an $80,000, 3- year, 6% per year, compounded semiannually loan with monthly payments from First Bank and Trust (FB&T). After making only two payments, a banker friend offered to make them a better deal: a 5-year, 4.2% per year, compounded semiannually loan with no transfer fee to his bank and a complete repayment no-fee-required of the remaining principal to FB&T. The principal on the new loan will be the remaining principal from the current loan. Answer the following questions for the Fairfolds as they deliberate this new offer. (a) What is the current monthly payment on the $80,000 loan? (b) What is the current principal due on the current loan? (c) How much interest have they already paid in the first two payments?

4.44 The Fairfold family decided to buy a super ski and water sports boat. They took out an $80,000, 3- year, 6% per year, compounded semiannually loan with monthly payments from First Bank and Trust (FB&T). After making only two payments, a banker friend offered to make them a better deal: a 5-year, 4.2% per year, compounded semiannually loan with no transfer fee to his bank and a complete repayment no-fee-required of the remaining principal to FB&T. The principal on the new loan will be the remaining principal from the current loan. Answer the following questions for the Fairfolds as they deliberate this new offer. (a) What is the current monthly payment on the $80,000 loan? (b) What is the current principal due on the current loan? (c) How much interest have they already paid in the first two payments?

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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This problem is a complex financial problem that requires several skills, perhaps some from previous sections.Clark and Lana take a 30-year home mortgage of $125,000 at 7.9%, compounded monthly. They make their regular monthly payments for 5 years, then decide to pay $1200 per month. (a) Find their regular monthly payment. (Round your answer to the nearest cent.) (a) Find their regular monthly payment. (Round your answer to the nearest cent.) (c) How many payments of $1200 will it take to pay off the loan? Give the answer correct to two decimal places. (d) Use your answer to part (c) to find how much interest they save by paying the loan this way. (Round your answer to the nearest cent.)
A friend of yours just bought a new sports car with a $5,000 down payment,and her $30,000 car loan is financed at an interest rate of 0.75% per month for 48 months. After two years, the “Blue Book” value of her vehicle in the used-car marketplace is $15,000. Solve, a. How much does your friend still owe on the car loan immediately after she makes her 24th payment? b. Compare your answer to Part (a) to $15,000. This situation is called being “upside down.” What can she do about it? Discuss your idea(s) with your instructor.
3. Chrissy is looking to buy a new bedroom set for $9674.99 She would also have to pay a $300 delivery fee. She is considering the following two credit options: Financing through the store at 3.7%, compounded monthly for a term of 2 years, with the incentive that the dealership will remove the shipping charge AND give a $500 rebate. • A bank loan at 3.5%, compounded monthly, for a term of 3 years. a. What are the monthly payments for each option? b. What is the total payment for each option? c. Which option should she choose and why? d. Why might she choose the other option?
None
3
7
Item 3 Christina Sanders is concerned about the financing of a home. She saw a small Cape Cod–style house that sells for $90,000. If she puts 10% down, what will her monthly payment be at (a) 30 years, 5%; (b) 30 years, 512%512% ; (c) 30 years, 6%; and (d) 30 years, 612%612% ? What is the total cost of interest over the cost of the loan for each assumption? (Round your answers to the nearest cent.)
Problem 2: Judy gets financing for a home loan on a $900,000 single bedroom, one bath 500 sq ft. home in a great part of Santa Cruz (near the Boardwalk). She can amortize the $900,000 at 7.5% for 30 years. What are the monthly payments of the loan? Be sure to circle answer. Round answer to nearest whole dollar.
This problem is a complex financial problem that requires several skills, perhaps some from previous sections.Clark and Lana take a 30-year home mortgage of $122,000 at 7.4%, compounded monthly. They make their regular monthly payments for 5 years, then decide to pay $1300 per month. (a) Find their regular monthly payment. (Round your answer to the nearest cent.)$ (b) Find the unpaid balance when they begin paying the $1300. (Round your answer to the nearest cent.)$ (c) How many payments of $1300 will it take to pay off the loan? Give the answer correct to two decimal places. monthly payments(d) Use your answer to part (c) to find how much interest they save by paying the loan this way. (Round your answer to the nearest cent.)
Please solve part c and d Don't copy from another source.
Howard owns a small electronics repair shop. He wants to borrow $10,000 now and repay it over the next 1 or 2 years. He believes that new diagnostic test equipment will allow him to work on a wider variety of electronic items and increase his annual revenue. Howard received 2-year repayment options from banks A and B. Amount to pay $ per year Amount to pay $ per year Year Bank A Bank B 1 5,378.05 5000.00 2 5,378.05 5755.00 Total Paid 10,756.10 10755.00 During a family conversation, Howard’s brother-in-law offered to lend him the $10,000 now and take $10,600 after exactly 1 year. Now Howard has three options and wonders which one to take. Which one is economically the best?

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