A supermarket building was constructed 6 years ago financed by a ten- year bank loan of Php1,000,000 with 9% annual interest rate, compounded monthly. The company operating the supermarket has paid all the monthly installments for the past 6 years. However, to reduce the amount of the installment payments, it was decided to refinance the balance of the loan through an insurance company. The new loan is for 10 years with interest at 10%, compounded quarterly, and with a service charge of 6% to be added to the loan. Determine (a) the balance due on the original mortgage, and (b) the amount of the quarterly payments to the insurance company.

A supermarket building was constructed 6 years ago financed by a ten- year bank loan of Php1,000,000 with 9% annual interest rate, compounded monthly. The company operating the supermarket has paid all the monthly installments for the past 6 years. However, to reduce the amount of the installment payments, it was decided to refinance the balance of the loan through an insurance company. The new loan is for 10 years with interest at 10%, compounded quarterly, and with a service charge of 6% to be added to the loan. Determine (a) the balance due on the original mortgage, and (b) the amount of the quarterly payments to the insurance company.

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

See similar textbooks

Related questions

Q: equivalent annual cash flows of $400,000 for the first 5 years. If the cash flow in year 1

Q: A warehouse is initially rented for Php. 100, 000.00 a year. If the 10-year lease contract indicates…

A: The objective of the question is to calculate the present worth of a 10-year lease contract for a…

Q: Kofi and Nana made two investments of $25,000 and $40,000 with different investors that yielded a…

Q: Spivey just won the Powerball lottery! The $25,000,000 jackpot will be paid in 10 annual…

Q: Lina saved RM4000 in a bank that offered simple interest at 10% per annum. After 3 years, she…

A: Since you have posted multiple questions as per the guidelines we can solve only 1 question

Q: Pls do fast

A: A1 = $1500 n1 = 6 years In year 9 - OTD - $3500 In year 11 - OTW - $2500 From year 12: A2 = ? n2 =…

Q: The American Pharmaceutical Company (APC) has a policy that all capital investments must have a…

A: The objective of this question is to determine whether the project meets the American Pharmaceutical…

Q: 2. Find the present worth in year 0 (PT) for the cash flow diagram using an interest rate of 10% per…

A: Present value refers to the sum of money or the value of a certain asset or investment whose cash…

Q: A cash prize was invested 5 years and 5 months ago at 12% compounded semi-annually for a puzzle that…

A: Present value is is the value of investment in today's dollar. Future value is the value of…

Q: 2. If a Plastics company purchases a new building now for $1.3 million for its corporate…

A: The amount that a present investment will increase in value over time when kept in a compound…

Question

A supermarket building was constructed 6 years ago financed by a ten-
year bank loan of Php1,000,000 with 9% annual interest rate,
compounded monthly. The company operating the supermarket has paid
all the monthly installments for the past 6 years. However, to reduce the
amount of the installment payments, it was decided to refinance the
balance of the loan through an insurance company. The new loan is for 10
years with interest at 10%, compounded quarterly, and with a service
charge of 6% to be added to the loan. Determine (a) the balance due on
the original mortgage, and (b) the amount of the quarterly payments to
the insurance company.

Expert Solution

This question has been solved!

Explore an expertly crafted, step-by-step solution for a thorough understanding of key concepts.

This is a popular solution!

SEE SOLUTION Check out a sample Q&A here

Step 1

VIEW

Step 2

VIEW

Step 3

VIEW

Trending now

This is a popular solution!

Step by step

Solved in 3 steps

SEE SOLUTION Check out a sample Q&A here

Knowledge Booster

Learn more about

Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, economics and related others by exploring similar questions and additional content below.

Similar questions

5. The GAP company has some of its jeans manufactured under a contract with an independent clothing designer; JSC Inc. If JSC operating cost is $35,000 per year in years 1 – 2, but then expenses increase by 9% per year through year 8. a. Draw and label the cash flow diagram b. What is the present worth of this operating cost model at year 0 assuming an interest rate of 15% per year?
Engineering Economics
Engr. Lalai wants to prepare funds so when she retires, she will be able to receive equal withdrawals of P50,000 annually from her 60th to 75th year. She invested equal amounts during her 35th to 59th birthdays in a trust fund that compounds 12% annually. How much was Engr. Lalai’s equal deposits from those years?
The compound interest on a certain sum of money at 25% for 3 years is Php 47,656.25. Its simple interest at the same rate and for the same period is? complete solution pls
A man borrowed P100,000 with 20% interest promised to pay the amount annually for 10 years however after the 6th deposit was made, he is in the position to pay the remaining balance. What amount should he pay?
A person buys a piece of lot for Php 110158 down payment and 10 deferred semi-annual payments of P 5,000 each, starting 5 years from now. What is the present value of the investment if the rate of interest is 13% per year compounded quarterly? Provide cash flow diagram. Round off the interest rate to five decimal places. Round your answer to 2 decimal places.
The compound interest on a certain sum of money at 25% for 3 years is Php 47,656.25. Its simple interest at the same rate and for the same period is Php?
1. John Doe Co., a company that makes tractors, budgeted $75,000 per year to pay for certain components over the next 6 years. If the company expects to spend $16,000 in year 1, how much of a uniform (arithmetic) increase each year is the company expecting in the cost of this part? Assume the company uses an interest rate of 10 % per year.
Question 5 Maintenance money for a new building has been sought Mr. Kendall would like to make a donation to cover all future expected maintenance costs for the building. These maintenance costs are expected to be Php42641 each year for the first 5 years, Php53449 each year for year 6 through 10 and P62395 each year for year 11 through 15. If money is placed in account that will pay 12% interest compounded semi-annually, how large should the gift be? Round your answer to 2 decimal places. Add your answer FROM QUESTION 5: INCLUDE THE CASH FLOW DIAGRAM OF THIS PROBLEM AND ROUND OFF INTEREST RATE TO 5 SIGNIFICANT PLACES AND YOUR FINAL ANSWER TO 2 DECIMAL PLACES.)
If Php 10,000 is deposited each year for 9 years, how much annuity can a person get annually from the bank every year for 8 years starting 1 year after the 9th deposit is made? Cost of money is 14%. Show chasflow diagram and complete solution.