A loan is being repaid with payments of $750 at the end of each year for 25 years. The annual effective interest rate on the loan is 5%. Each loan payment received by the lender is immediately reinvested at an annual effective rate of 6%. a) Calculate the accumulated value of the lender's reinvested payments at the end of 25 years (i.e., immediately after the last payment is made on the loan). b) Find the effective yield rate earned by the lender over the 25-year period.

A loan is being repaid with payments of $750 at the end of each year for 25 years. The annual effective interest rate on the loan is 5%. Each loan payment received by the lender is immediately reinvested at an annual effective rate of 6%. a) Calculate the accumulated value of the lender's reinvested payments at the end of 25 years (i.e., immediately after the last payment is made on the loan). b) Find the effective yield rate earned by the lender over the 25-year period.

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

See similar textbooks

Similar questions

You borrowed $200,000 from the Bank of Nova Scotia. The loan is to be repaid at the end of five (5) years. The bank is to receive 8% interest on the loan balance that is outstanding. i. Calculate the yearly payment on a $200 000 loan. ii. Prepare an amortization schedule for this loan. iii. What is the loan balance just after the end of year two (2)? iv. What is the total interest paid over the life of the loan? v. What is the effective rate of interest on the loan if interest is compounded quarterly?
Using the Add-On Method, calculate the monthly payment for a $ 8,500 loan that is borrowed for 3 years at an interest rate of 4%
Ross Land has a loan of $8,500 compounded quarterly for four years at 4%. What is the effective interest rate for the loan? Click here to view page 1 of the future value table. Click here to view page 2 of the future value table. The effective interest rate is %. (Round to two decimal places as needed.)
John received a loan of $40,500, 6 years ago. The interest rate charged on the loan was 4.68% compounded quarterly for the first 6 months, 5.46% compounded semi-annually for the next 2 years, and 5.88% compounded monthly thereafter. a. Calculate the accumulated value of the loan at the end of the first 6 months. Round to the nearest cent b. Calculate the accumulated value of the loan at the end of the next 2 year period. Round to the nearest cent c. Calculate the accumulated value of the loan today. Round to the nearest cent d. Calculate the amount of interest charged on this loan over the past 6 years. jamie wants to double his money in 9 years in an investment fund. What quarterly compounding interest rate do you suggest that he looks for?
Consider a home mortgage of $125,000 at a fixed APR of 4.5% for 25 years. a. Calculate the monthly payment. b. Determine the total amount paid over the term of the loan. c. Of the total amount paid, what percentage is paid toward the principal and what percentage is paid for interest. ..... a. The monthly payment is $ (Do not round until the final answer. Then round to the nearest cent as needed.)
Complete the following from the first three lines of an amortization schedule for the following loan:You borrow $ 330000 with an annual interest rate of 6% over 20 years Starting principal = $ 330000New balance after month 1 payment = New balance after month 2 payment = New balance after month 3 payment =
A borrower is interested in comparing the monthly payments on four otherwise equivalent 30 year FRMs. All of the loans are for $300,000 and have a 5.0% interest rate. Rank the loans in size order of their monthly payments from smallest to largest: 1) Fully amortizing ($0 balance remaining at the end of the loan term) 2) Interest-Only ($300,000 balance remaining at the end of the loan term) 3) Partial Amortization ($200,000 balance remaining at the end of the loan term) 4) Negative Amortization ($400,000 balance remaining at the end of the loan term) a) 1, 2, 3, 4 b) 4, 3, 2, 1 c) 4, 2, 3, 1 d) 1, 3, 2, 4
Pls help correct thanks . Prepare an amortization schedule for a three-year loan of $102,000. The interest rate is 11 percent per year, and the loan agreement calls for a principal reduction of $34,000 every year. How much total interest is paid over the life of the loan?.
Calculate and print out the balance due, principal payment, and interest payment for each period of a new car loan. The nominal interest is 8% per year, compounded monthly. Payments are made monthly for 5 years. The original loan is for $27,000.
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.

Recommended textbooks for you

Essentials Of Investments

Finance

ISBN:

9781260013924

Author:

Bodie, Zvi, Kane, Alex, MARCUS, Alan J.

Publisher:

Mcgraw-hill Education,

FUNDAMENTALS OF CORPORATE FINANCE

Finance

ISBN:

9781260013962

Author:

BREALEY

Publisher:

RENT MCG

Financial Management: Theory & Practice

Finance

ISBN:

9781337909730

Author:

Brigham

Publisher:

Cengage

Foundations Of Finance

Finance

ISBN:

9780134897264

Author:

KEOWN, Arthur J., Martin, John D., PETTY, J. William

Publisher:

Pearson,

Fundamentals of Financial Management (MindTap Cou…

Finance

ISBN:

9781337395250

Author:

Eugene F. Brigham, Joel F. Houston

Publisher:

Cengage Learning

Corporate Finance (The Mcgraw-hill/Irwin Series i…

Finance

ISBN:

9780077861759

Author:

Stephen A. Ross Franco Modigliani Professor of Financial Economics Professor, Randolph W Westerfield Robert R. Dockson Deans Chair in Bus. Admin., Jeffrey Jaffe, Bradford D Jordan Professor

Publisher:

McGraw-Hill Education

Essentials Of Investments

Finance

ISBN:

9781260013924

Author:

Bodie, Zvi, Kane, Alex, MARCUS, Alan J.

Publisher:

Mcgraw-hill Education,

FUNDAMENTALS OF CORPORATE FINANCE

Finance

ISBN:

9781260013962

Author:

BREALEY

Publisher:

RENT MCG

Financial Management: Theory & Practice

Finance

ISBN:

9781337909730

Author:

Brigham

Publisher:

Cengage

Foundations Of Finance

Finance

ISBN:

9780134897264

Author:

KEOWN, Arthur J., Martin, John D., PETTY, J. William

Publisher:

Pearson,

Fundamentals of Financial Management (MindTap Cou…

Finance

ISBN:

9781337395250

Author:

Eugene F. Brigham, Joel F. Houston

Publisher:

Cengage Learning

Corporate Finance (The Mcgraw-hill/Irwin Series i…

Finance

ISBN:

9780077861759

Author:

Stephen A. Ross Franco Modigliani Professor of Financial Economics Professor, Randolph W Westerfield Robert R. Dockson Deans Chair in Bus. Admin., Jeffrey Jaffe, Bradford D Jordan Professor

Publisher:

McGraw-Hill Education

SEE MORE TEXTBOOKS