Amortization schedule. Chuck Ponzi has talked an elderly woman into loaning him $50,000 for a new business venture. She has, however, successfully passed a financeclass and requires Chuck to sign a binding contract on repayment of the $50,000 with an annual interest rate of 8% over the next 5 years. Ponzi may choose to pay off theloan early if interest rates change during the next 5 years. Determine the ending balance of the loan each year under the three different payment plans:a. the discount loanb. the interest-only loanc. the fully amortized loan......a. If Chuck chooses the discount loan, what is the ending balance of the discount loan in year 1?2$(Round to the nearest cent.)

Answered: Image /qna-images/answer/f1202d9e-e9da-4278-bf79-691c6748786d.jpg

Answered: Amortization schedule. Chuck Ponzi has…

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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Assume that you will have a 10-year, $10,000 loan to repay when you graduate from college next month. The loan, plus 8 percent annual interest on the unpaid balance, is to be repaid in 10 annual installments of $1,490 each, beginning one year after you graduate. You have accepted a wellpaying job and are considering an early settlement of the entire unpaid balance in just three years (immediately after making the third annual payment of $1,490). Prepare an amortization schedule showing how much money you will need to save to pay the entire unpaid balance of your loan three years after your graduation. (Round amounts to the nearest dollar.)
Suppose a recent college graduate's first job allows her to deposit $250 at the end of each month in a savings plan that earns 9%, compounded monthly. This savings plan continues for 14 years before new obligations make it impossible to continue. How much money has accrued in the account at the end of the 14 years? (Round your answer to the nearest cent.) $ If the accrued amount remains in the plan for the next 15 years without deposits or withdrawals, how much money will be in the account 29 years after the plan began? (Round your answer to the nearest cent.) $
Discount loan (interest and principal at maturity). Chuck Ponzi has talked an elderly woman into loaning him $20,000 for a new business venture. She has, however, successfully passed a finance class and requires Chuck to sign a binding contract on repayment of the $20,000 with an annual interest rate of 11% over the next 5 years. Determine the cash flow to the woman under a discount loan, in which Ponzi will have a lump-sum payment at the end of the contract. What is the amount of payment that the woman will receive at the end of years 1 through 4? $ (Round to the nearest cent.)
The Flemings secured a bank loan of $280,000 to help finance the purchase of a house. The bank charges interest at a rate of 3%/year on the unpaid balance, and interest computations are made at the end of each month. The Flemings have agreed to repay the loan in equal monthly installments over 25 years. What should be the size of each repayment if the loan is to be amortized at the end of the term? (Round your answer to the nearest cent.)The Flemings secured a bank loan of $280,000 to help finance the purchase of a house. The bank charges interest at a rate of 3%/year on the unpaid balance, and interest computations are made at the end of each month. The Flemings have agreed to repay the loan in equal monthly installments over 25 years. What should be the size of each repayment if the loan is to be amortized at the end of the term? (Round your answer to the nearest cent.)The Flemings secured a bank loan of $280,000 to help finance the purchase of a house. The bank charges interest at a…
Mr. and Mrs. Williams are buying a new house for $350,000. Compare the two loan offers by finding the monthly payments for each and calculating the total amount paid for each. Loan Options Down Payment Monthly Payment Total 10% down payment, 5.5% APR for 30 years 15% down payment, 4.5% APR for 25 years
Discount loan (interest and principal at maturity). Chuck Ponzi has talked an elderly woman into loaning him $45,000 for a new business venture. She has, however, successfully passed a finance class and requires Chuck to sign a binding contract on repayment of the $45,000 with an annual interest rate of 11% over the next 5 years. Determine the cash flow to the woman under a discount loan, in which Ponzi will have a lump-sum payment at the end of the contract. What is the amount of payment that the woman will receive at the end of years 1 through 4? $nothing (Round to the nearest cent.)
A property is available for sale that could be financed with a fully amortizing $250,000 loan at 8% with a monthly payment over 30 years. The builder is offering buyers a mortgage that reduces the payment by 20% for first and second year. After the second year, regular payment would be made for the remainder of the loan term. What is the first-year monthly payment for buyer? 1467.53 1657.32 1723.56
A new home was purchased in Niagara Fall’s Butler Heights subdivision for $375,000 by Karen. The house is going to be financed by making a down payment of 15% and financing the balance with a conventional mortgage. The mortgage is to be amortized over 20 years with weekly payments. The rate chosen for the first four years of the mortgage is 2.79% compounded semi-annually. Show all work with formulas a) Determine the size of the weekly payments? b) What will the outstanding balance be after the first four years? c) Determine the size of the new weekly payment if after the first four year term she renews the mortgage using a fixed rate of 2.04% compounded semi-annually.
A husband and wife buy a new home and take out a $100000 mortgage loan with level annual payments at the end of each year for 15 years on which the effective rate of interest is equal to 5.5%. At the end of 5 years they decide to make a major addition to the house and want to borrow an additional $70000 to finance the new construction. They also wish to lengthen the overall length of the loan by 8 years (i.e. until 23 years after the date of the original loan). In the negotiations the lender agrees to these modifications, but only if the effective interest rate for the remainder of the loan after the first 5 years s raised to 6.5%. Find the revised annual payment which would result for the remainder of the loan. ANSWER = $

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