ADD-ON LOANS vs SIMPLE INTEREST LOANS. You are borrowing $500,000 on a 30 year, 5.5% interest loan to buy a property. 18a) What will the total interest be if it was an add-on interest loan? 18b) How much would the monthly payment be (for 30 years) if it was an add- on interest loan? 18c) What will the total interest be if it was a simple interest amortized loan? 18d) How much would be the monthly payment (for 30 years) if it was a simple interest amortized loan?

Q: What would the monthly payment be? It is a zero amortizing loan

A: Given  Pv=300000*75%=225000 i=6%/12=0.5% n=30*12=360 Pv=pmt*(1-(1+i)^-n)/i

Q: 1)You have taken out a loan of 3,000,000 to buy an apartment. The loan is an annuity loan of 30…

A: The loan is a facility provided by financial institution to buy an asset and repay it in future in…

Q: You loan from a loan firm an amount of $100,000 with a simple interest rate of 20% but the interest…

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

Q: Suppose you have taken out a $125,090 fully amortizing fixed rate mortgage loan that has a term of…

A: A mortgage refers to a covered loan that is borrowed for purchasing a property with the property…

Q: Assume the monthly payment of a loan amount of $400,000 is $1450. How long will it take to retire…

A: The loans are paid by the monthly payments and these are fixed and equal types of payments and they…

Q: Suppose a bank offers you an 6 25% interest rate on a 30-year mortgage to be paid back with monthly…

A: Monthly payment (C) = $1700 Monthly interest rate (r) = 0.00520833333333333 (i.e. 0.0625 / 12)…

Q: A borrower can obtain an 80 percent loan with an 8 percent interest rate and monthly payments. The…

A: The incremental cost of borrowing is the cost needed to pay over and above the cost of using one…

Q: If you borrow $6,000 for 4 years and agree to pay back $8000, what simple interest rate will you end…

A: Simple interest is the type of interest that is calculated only on the principal amount. Simple…

Q: You can afford monthly payments of $700. If current mortgage rates are 2.82% for a 15-year fixed…

A: We will have to use and apply the concept of time value of money. The amount that you can afford to…

Q: A borrower can obtain an 85 percent loan with an 6 percent interest rate and monthly payments. The…

A: The incremental cost of borrowing is the cost needed to pay over and above the cost of using one…

Q: A borrower gets a $75,000, 25 year, 13% loan with 4 points.  What is the true interest rate?

A: Given Information: Loan amount is $75,000 Number of years is 25 Interest rate is 13% 4 points on…

Q: How can I get the amount of interest and, separately, principal paid in 25th payment if I have a 30…

A: Installment is the periodic amount paid by the borrower to the lender in order to pay back the loan…

Q: What are the annual payments for a 4-year $4,000 loan if the interest rate is 9% per year? Make up a…

A: Present value of annuity formula. PV = A *  1-(1+r)-nr where , PV = Present value of annuity  A =…

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: 13. Mortgage payments Mortgages, loans taken to purchase a property, involve regular payments at…

A: Present value of annuity formula.PV  =  A  *  where,PV = present value of annuityA = periodic…

Q: he following loan is a simple interest amortized loan with monthly payments. $7000, 7%, 4 years (a)…

A: A loan indicates a sum borrowed to meet specific needs. The loan amount is generally repaid via a…

Q: r APR). Under this loan proposal, your mortgage payment will be               per month. (Note:…

A: SOLUTION:- (A) Loan amount (PV) = $700,000 No of periods = 30*12 = 360 Rate per period = 10%/12 =…

Q: You have the choice between a 15 year mortgage at 4.5% and a 30 year mortgage at 4.7%, you are…

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Q: Suppose a bank offers you a 10% interest rate on a 25-year mortgage to be paid back with monthly…

A:

Q: A borrower is purchasing a property for $1,800,000 and can choose between two possible loan…

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Q: Amortizing loans Suppose that you take out a 30-year mortgage loan of $200,000 at an interest rate…

A: A mortgage loan refers to the type of loan that is secured by the underlying of specific asset, the…

Q: What are your monthly payments if the mortgage is for 30 years and the nominal annual mortgage…

A: Information provided: Principal amount = $150,000 Term = 30 years Interest rate = 5.50%

Q: 14) You are considering borrowing OMR150,000 to purchase a new home. a. Calculate the monthly…

A: Using the PMT function in excel.

Q: Suppose you are buying your first home for $144,000, and you have $17,000 for your down payment. You…

A: purchasing price = $144,000 down payment = $17,000 loan amount = $144,000 - 17,000…

Q: a. Create the amortization speadsheet for a $15,000,000 fixed-rate commerical mortgage loan. The…

A: Balloon payment: It is the lump sum payment of the principal amount which is paid by the borrower…

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: 9) Mortgage Payment You take out a 20-year fixed mortgage. The annual interest rate is ? = 0.10 and…

A: PV is the current worth of cash flows that are expected to occur in future.

Q: a. How much is the monthly loan repayment amount? b. If you double your loan repayment each month…

A: The amount borrowed from any financial institution or an individual is known as loan. Borrower needs…

Q: Consider a 30-year, fixed-rate mortgage for $120,000 at a nominal rate of 6% with monthly payments.…

A: Loan amount(PV)=$120,000 Duration (n)=30*12=360 periods Rate per period(i)=0.0612=0.005 Monthly…

Q: 3. You are considering taking out a loan for $17,000 to buy a new car. The annual interest rate is…

A: Compound = monthly = 12 Present value = pv = $17,000 Interest rate = r = 9.5 / 12% Time = t = 4 * 12…

Q: Assume we have a $500,000 mortgage at a 3.5% original interest rate, 30-year term, and monthly…

A: Loan (mortgage) amortization schedule refers to a schedule which is prepared to show the periodic…

Q: Suppose the interest rate is 4.4%. a. Having $550 today is equivalent to having what amount in one…

A: a. Future Value:Having $550 today is equivalent to having $574.20 in one year at a 4.4% interest…

Q: A borrower can obtain an 80% loan with an 8% interest rate and monthly payments. The loan is to be…

A: The incremental cost of borrowing is the cost needed to pay over and above the cost of using one…

Q: Discount loan. Up-Front Bank uses discount loans for all its customers who want one-year loans.…

A: Interest on discount rate = 8.5%  Repayment Amount = $225,000 The initial amount will be equal to…

Q: Which mortgage would result in higher total payments? Mortgage A: $985 a month for 30 years Mortgage…

A: Total Payment = Monthly Payment * No. of months

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Q: A borrower is purchasing a property for $180,000 and can choose between two possible loan…

A: Loan alternatives refer to the options that are available for the borrower to avail debt. He/she can…

Q: What is amortization?  Describe other types of loan arrangements. If you could afford to pay cash…

A: Repayment of loan is made in fixed instalments which includes interest due and part of principal for…

Q: Question: Thank you Suppose that you have borrowed $250,000 in the form of a 30-year loan with an…

A: Note - Since you have asked multiple question, we will solve the first question for you. If you want…

Effective Interest Rate

The term interest rate can be defined as the amount that is charged by the lender as a percentage on the principal amount. Interest rate which is charged annually is known as annual percentage rate.