Ariells borrows 400.000 at i-.03. She repays this loan by paying off only the interest due at the end of each year to the lender and depositing a level amount Y at the end of each year into a sinking fund account offering 6% APY so as to accumulate the full balance of the loan amount in the sinking fund at the end of 15 years. Find the AEIR that Arielle has ended up paying on this loan.

Q: years. The interest rate is i(12) = 8.750%. What is the outstanding balance on the loan just after…

A: The time value of money recognizes the idea that the value of an amount of money today differs from…

Q: Karen obtained a $20,000 loan at 4% compounded semiannually. a-1. What monthly payment will repay…

A: Monthly payment refers to an amount that is paid every month for the repayment of a loan amount…

Q: a. How many payments are required to repay the loan? Number of payments b. Use the given information…

A: Amortization is the process of gradually repaying the loan. In an amortizing loan, a portion of each…

Q: Kurt loans Randy $14000. Randy repays the loan by paying Kurt $4000 at the end of one year and $6000…

A: The Effective Interest Rate is the actual interest rate earned or paid on a financial instrument…

Q: Lillian took out a 20-year loan for $170,000 at 8.8% interest, compounded monthly. If her monthly…

A: A loan is a financial arrangement in which one person borrows funds from another person at a…

Q: Mr. and Mrs. Smith have just purchased a $600,000 house and have made a down payment of$120,000.…

A: Accroding to the question, Principal= Beginning balance of the loan at the beginning of period 1…

Q: Rachael invests $8000 for 7 years and 8 months. The account earns 12% semiannually. A) What is n…

A: Future value of present sum depends on whether it is simple interest or compounded…

Q: Jason owes $42000 due at the end of 3 years with interest at j4 = 2.5%. In order to payoff the loan…

A: In this financial scenario, Jason has a loan obligation of $42,000 due at the end of 3 years with an…

Q: Maya borrowed $700 from a lender that charged simple interest at an annual rate of  6%. When Maya…

A: A loan is a borrowing that an individual or entity takes into account. A lender is the other side in…

Q: Angelica Riordan received a four year non-subsidized student loan of $15,000 at an annual interest…

A: Equated monthly payments It is a monthly fixed payment given by the borrower to the lender on the…

Q: Vanessa initially borrowed $6,400 from RBC Bank at 3.64% compounded semi-annually. After 4 years she…

A: The future value function can be used to determine the future value of a sum at a given discount…

Q: Clara borrows $41,000 today at 2.9% per year compounded quarterly, to start her own buisness. she…

A: Given, Loan amount (p) = $41,000 Interest rate (r) = 2.9% Number of compounding periods (m) = 4…

Q: Karen obtained a $25,000 loan at 4.5% compounded semiannually. a-1. What monthly payment will repay…

A: The present value concept is useful for borrowers to assess the affordability of a loan. By…

Q: A couple borrows $935,000 for 7 years for the purchase of a vacation home at interest rate of 7…

A: The objective of the question is to calculate the annual payments on a loan and the reduction in the…

Q: Flo East has $25,000 to invest in a financial institution for a period of three years. Institution A…

A: Explanation : When we are calculating the Compounded Interest calculation Monthly Compounding…

Q: Angelica received a 12-year non-subsidized student loan of $18,000 at an annual interest rate of…

A: Non-subsidized student loan is a type of student loan that is not subsidized by the Federal…

Q: Ms. C took a loan of $150,000 at a rate of 7 percent. She can pay equal installments of $25,000 at…

A: PV(loan amount) = 150,000I/Y (interest rate) = 7%PMT (periodic payment) = 25,000

Q: What is the interest on interest if interest is compounded

A: Calculate the compound interest amount as follows:- Total amount after 3 years =P x (1+R/100)n…

Q: Leona Jefferson purchased a home and obtained a 20-year loan of $436,750 at an annual interest rate…

A: A mortgage refers to a covered loan that is borrowed for the purchase of a property which itself…

Q: Mindy takes out a 4-year loan of $5000 at an annual rate of discount of 5%. How much does she…

A: Present value is a financial concept that helps calculate the present value of money to be received…

Q: Yolanda deposited $1,600 at the end of each six months for 2 years in a savings account. If the…

A: Future value (FV) refers to the sum value of current assets of the company which is evaluated at a…

Q: Anushka and Benicio borrowed $47,000 at 7% compounded semi-annually as a second mortgage loan…

A: Loan amortization involves paying off a debt over time in equal installments. Part of each payment…

Q: Ma. Nochna Pula borrowed $10,000 at 6% annual compound interest. She agreed to repay the loan with…

A: Annual payment can be calculated using the present value of annuity formula. Present value of…

Q: Ms. C took a loan of $150,000 at a rate of 7 percent. She can pay equal installments of $25,000 at…

A: The number of years over which she can repay the loan amount can be calculated using the NPER…

Cost of Credit

The cost of credit is an extra amount that the borrower has to pay besides the loan amount. These credit charges may vary from loan to loan. The cost of credit includes interest charges, maintenance charges, and arrangement charges. Some of the costs are mandatorily collected by the lender based on the loan amount and tenure of the loan. The cost of credit is also called finance charges of the credit.