Bank A $235,000 20-year fixed 4.375% Bank B $235,000 20-year fixed 4.7% 1.75 discount points 0 discount points M=$1,470.92 M = $1,512.22 What is the break-even point for the loans? O about 5 years about 8 years O about 6 years O about 7 years

Bank A $235,000 20-year fixed 4.375% Bank B $235,000 20-year fixed 4.7% 1.75 discount points 0 discount points M=$1,470.92 M = $1,512.22 What is the break-even point for the loans? O about 5 years about 8 years O about 6 years O about 7 years

Intermediate Financial Management (MindTap Course List)

13th Edition

ISBN:9781337395083

Author:Eugene F. Brigham, Phillip R. Daves

Publisher:Eugene F. Brigham, Phillip R. Daves

Chapter22: Providing And Obtaining Credit

Section: Chapter Questions

Problem 4P: Gifts Galore Inc. borrowed 1.5 million from National City Bank. The loan was made at a simple annual...

See similar textbooks

Related questions

Q: section 1231 summary

A: Tax is the liability which has to be paid by the individual and the corporation to the Federal…

Q: E15.4

A: Horizontal analysis is prepared to calculate the variance from previous year by showing…

Q: E2-6 (L05,6) (Assumptions, Principles, and Constraint) Presented below are the assumptions,…

A: Answers: (a)' Allocates expenses to revenues in the proper period'. (7) Expense recognition…

Q: 9.7 a and b2

A: Depreciation expense is an expense which is charged on fixed assets over the useful years, there are…

Q: Answer to Part C = 42250

A: Given, Maturity =10 Years Market interest rate: 6% Stated interest rate = 5% Price of the bond is…

Q: Complete requirement 1

A: Ratio analysis is a method of measuring the financial position of the organization with different…

Q: Please describe a scenario that is modeled by the following scenario: .0574 (12-18) 1+ 12 385 145130…

A: The scenario represented using the given computation is the future value of the annuity.

Q: E14.7

A: Cash flow statement: it is prepared to show the cash flow of the organization by analyzing the total…

Q: None

A: Here are proofs or counterexamples for the given statements:a) Counterexample:Let's consider a…

Concept explainers

Capital Gain

Any capital asset when sold can give the seller a higher or lower price from its purchase price leading to a capital gain or capital loss. The time period of holding an asset is decided based on if it is a long term or short-term capital gain. On that basis, the rate of taxation is decided if it is 20%, 15% or according to the tax brackets. The rate of taxation differs in the case of equity or debt, whether long or short term. The capital gain can be adjusted from capital loss to arrive at a net capital gain. The amount of gains and the exemption has to be reported in the tax return filed in the financial year in which the asset was transferred. The tax return can be filed quarterly, monthly, semi-annually or annually.

Question

A3)

Bank A
$235,000
20-year fixed
4.375%
Bank B
$235,000
20-year fixed
4.7%
1.75 discount points 0 discount points
M=$1,470.92
M=$1.512.22
What is the break-even point for the loans?
O about 5 years
O about 8 years
about 6 years
about 7 years

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

Trending now

This is a popular solution!

Step by step

Solved in 2 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, finance and related others by exploring similar questions and additional content below.

Similar questions

Gifts Galore Inc. borrowed 1.5 million from National City Bank. The loan was made at a simple annual interest rate of 9% a year for 3 months. A 20% compensating balance requirement raised the effective interest rate. a. The nominal annual rate on the loan was 11.25%. What is the true effective rate? b. What would be the effective cost of the loan if the note required discount interest? c. What would be the nominal annual interest rate on the loan if the bank did not require a compensating balance but required repayment in three equal monthly installments?
Loan amount: $20,000 Annual Interest rate: 5% Life of loan in years: 5 Need to calculate in excell the following: For the initial payment, how much of it is principal? (I got 56.56 is that correct?) For the initial payment, how much of it is interset? (I got 1000, I dont think that is right but pls confirm) For the final payment, how much of it is principal? (I got 68.75 is that correct?) For the final payment, how much of it is interest? (I got 219.98 is that correct?) Thank you!
Increasing the down payment on a mortgage reduces both the size of the monthly payments and the total interest paid. Calculate (a) the reduction in the monthly payment by increasing the down payment by the amount specified, and (b) the amount saved on interest over the life of the loan. Assume the mortgage in for 10 years and use the amortization table to find the monthly payments Increase in Amount of Loan Interest Rate Down payment $150,000 5% $9,000 Click the icon to view a table of monthly payments on a $1,000 loan. Down Payment $27,000 a. The monthly payment will be reduced by $ when the down payment is increased by $9,000 (Round to the nearest cent as needed.) b. Increasing the down payment by $9.000 saved on interest over the life of the loan (Round to the nearest cent as needed)
Loan amortization: ending balance 8. Suppose you borrowed $15,000 at a rate of 6% and must repay it in 4 equal installments at the end of each of the next 4 years. How much would you still owe at the end of the second year, after you have made the second payment? a. $3,634.60 b. $ 4,083.84 c. $4,328.87 d. $ 7,936.52 e. $11,571.13
PLS ANSWER THIS QUESTION ASAP WILL RATE YOU!
Finance question thanks
Suppose you borrow $14,000. The interest rate is 11%, and it requires 4 equal end-of-year payments. Set up an amortization schedule that shows the annual payments, interest payments, principal repayments, and beginning and ending loan balances. Round your answers to the nearest cent. If your answer is zero, enter "0". Beginning Repayment Ending Year Balance Payment Interest of Principal Balance 1 $ fill in the blank 60 $ fill in the blank 61 $ fill in the blank 62 $ fill in the blank 63 $ fill in the blank 64 2 $ fill in the blank 65 $ fill in the blank 66 $ fill in the blank 67 $ fill in the blank 68 $ fill in the blank 69 3 $ fill in the blank 70 $ fill in the blank 71 $ fill in the blank 72 $ fill in the blank 73 $ fill in the blank 74 4 $ fill in the blank 75 $ fill in the blank 76 $ fill in the blank 77 $ fill in the blank 78 $ fill in the blank 79
None
Franklin's new snowmobile cost $9,500. After his down payment of $1,500, he financed the remainder at 10% for 3 years. Use the table to find the monthly payment for the amortized loan. Find the total interest paid on the loan. Click the icon to view a table of monthly payments on a $1,000 loan. The monthly payments for this loan are $. (Round to the nearest cent as needed.) Enter your answer in the answer box and then click Check Answer. ? 1 part remaining Clear All Greck Answer javascript:doExercise(5); Copyright © 2020 Pearson Education Inc. All rights reserved. | 99 a 近
Help pls
✅❌❌✅✅✅
The Ruffins are negotiating with two banks for a mortgage to buy a house selling for $145,000. The terms at bank A are a 25% down payment, an interest rate of 10%, a 30-year conventional mortgage, and 3 points to be paid at the time of closing. The terms at bank B are a 15% down payment, an interest rate of 11.0%, a 25-year conventional mortgage, and no points. Which loan should the Ruffins select in order for the total cost of the house to be less? Click the icon to view the table of monthly payments. From which bank should the Ruffins take the loan? Bank B O Bank A