A demand loan of $3000.00 is repaid by payments of $1500.00 after two years, $1500.00 after four years, and a final payment after six years. Interest is 7% compounded quarterly for the first two years, 8% compounded annually for the next two years, and 8% compounded quarterly thereafter. What is the size of the final payment?

A demand loan of $3000.00 is repaid by payments of $1500.00 after two years, $1500.00 after four years, and a final payment after six years. Interest is 7% compounded quarterly for the first two years, 8% compounded annually for the next two years, and 8% compounded quarterly thereafter. What is the size of the final payment?

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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Consider a loan of $90,000 at 4% compounded annually, with 12 annual payments. Find the following. (a) the payment necessary to amortize the loan (b) the total payments and the total amount of interest paid based on the calculated annual payments (c) the total payments and total amount of interest paid based upon an amortization table. (a) The annual payment needed to amortize this loan is $ (Round to the nearest cent as needed.) (b) The total amount of the payments is S (Round to the nearest cent as needed.) The total amount of interest paid is $ (Round to the nearest cent as needed.) (c) The total payment for this loan from the amortization table is $. (Round to the nearest cent as needed.) The total interest from the amortization table is $ (Round to the nearest cent as needed.)
Consider a loan of $1,000 for five years with 10% add-on interest and the loan is to be paid off in five year-end payments. The funds that are borrowed (available to the borrower) are $1,000 and the “interest” is $100 × 5 = $500. The installments are calculated based on a loan principal amount of $1,000 + 500 = $1,500: $1,500/5 = $300 each. How much is the borrower really paying to borrow $1,000? Let’s restate this loan in more familiar terms: Present value = $1,000 Number of payments = 5 Amount of each payment = $300 and $1,000 = $300(present value of an annuity for T = 5 and r = ?) What is r=?
A $40,000 loan at 7.5% compounded monthly is to be repaid by equal monthly payments of $400 per month. (a) How much interest is paid in the 4th year? (b) How long will it take to pay off the loan (number of full payments), and what will be the amount of the last payment (partial payment)?
Suppose you wish to borrow $60,000 at an annually compounded interest rate of 16% for a period of 14 years. What would be the annual repayment?
A loan in the amount of 300,000 is repaid with 20 end of year payments containing equal principal. The annual effective interest rate isi, and the total interest paid during the life of the loan is 250,000 . Just after the 10 th payment is made, the loan is renegotiated. There will now be 10 end of year payments ofXwith the annual effective interest rate remaining ati. Find the outstanding loan balance just after the 11th payment.
A demand loan for $8955.33 with interest at 9.3% compounded semi-annually is repaid after 8 years, 8 months. What is the amount of interest paid? The amount of interest is $
a loan of 25,000 has the following terms. the nominal interest rate is 8% compounded monthly; there will be n payments of 489.9 each starting at the end of the first month; and there will be one larger payment at the end of n+1 months. immediately after the 18th payment, the borrower refinances the loan with a new 24 month loan with a nominal 4.5% rate compounded monthly. the first payment is due one month after refinancing. what is the new monthly payment?
Use the Amortization Table to determine the payment required to amortize a loan of $7500 at an annual interest rate of 12% with a term of 15 years. Payments are to be made monthly.What is the amount of each payment?
A 20-year loan of 1000 is repaid with payments at the end of each year. Each of the first 10 payments = 150% of the amount of interest due. Each of the last 10 payments is X. Find X if the lender charges interest at an annual effective rate of 10%.
Suppose you take on a loan that is subject to an annual interest rate of 12%, with the interest rate being calculated at the end of each month. Two years later you pay back the loan in full by making a payment of $1,020. What was the original amount of the loan?
Prepare an amortization schedule for a five-year loan of $20,000 in its entirety. The interest rate is 8.2 percent per year, and the loan calls for equal annual payments.
Today, you take out a $5000 loan at 10% simple interest, which is to be repaid with two equal payments at the end of the first year and at the end of the second year. Find the size of the payments using today as your focal date

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