Bonita intends to open a small fabric shop and borrows the money for it from her aunt Magda. Bonita feels that she will only be able to start repaying her debt after three years. Bonita will then pay aunt Magda R105 000 per year for five years. Money is worth 19,5% per year.   The present value of Bonita’s debt at the time she will start paying aunt Magda back is [1] R408 978,93. [2] R317 500,78. [3] R222 924,04. [4] R525 000,00. [5] R436 649,07.

Q: A woman buys a house for a ​$260,000. She pays ​$20,000 down and takes out a mortgage at 5.1​% for…

A: Purchase Price of House = pp = $260,000Down Payment = dp = $20,000Compound = Monthly = 12Interest…

Q: Define Expenses

A: Expenses are the cost that is incurred by the firm or the company to run the business. Basically,…

Q: Calculate the return that Lin Shan is earning on her annuity.

A: Given, Investment - PV = 1000000 Payment - PMT = 60000/2 = 30000 years - N = 15 Period - m = 15*12 =…

Q: is expected to be received in 5 years and her last annual payment is expected in 10 years. She can…

A: Annual payment=$49900Interest rate=12.84%Period= 5 years

Q: Maria saved money for her dream house but she needed Php700,000 more to complete the deal. The banks…

A: We take loans or mortgages to purchase large ticket items like a car or a house. The loan or the…

Q: Crysta just borrowed $59,000.00. She plans to repay this loan by making a special payment of…

A: Annual payment refers to an amount that is paid annually for the repayment of a loan amount by the…

Q: Alice needs P 4,000 per year for four years to go to college. Her father invested P 5,000 in 7%…

A: Future value of an amount is calculated as: = Amount * (1+rate)^number of periods

Q: Tina decided to buy her first home. She found a house for $153,650. She will need to finance…

A: Time value tells that money received today is of more value than that of receiving the exact value…

Q: Susan Orman wants to pay $1500 semiannually to her granddaughter for 10 years for helping her around…

A:

Q: Joann wants to save for her daughter's education. Tuition costs $9,000 per year in today's dollars.…

A: The time value of money is a financial concept that acknowledges the idea that a dollar today is…

Q: amount (same buying power) which she currently enjoys. Inflation is expected to remain at 6% pa…

A: If you plan properly and on time for retirement than you can retire with good amount of money on…

Q: Sara purchased a three-bedroom, two-storey house for $209 000 with a 10% down payment. The mortgage…

A: The down payment refers to the money paid by the customer in the early stage of purchasing the…

Q: Julie and Rex Parker plan to buy a $310,000 home, paying 20% downpayment and financing the balance…

A: The PMT function or concept can be used to determine the periodic payments required to accumulate a…

Q: Carol borrows $27,663 to help pay for expenses. The loan is for 7 years and carries an annual rate…

A: Amortization is a financial concept that refers to the gradual repayment of a debt, typically…

Q: Fatzamata and Maggie have $30,000 for a down payment on a future house. Their budget can accomodate…

A: Given: Amount available for downpayment : $30,000 Monthly mortgage payment: $1200 The amount owed to…

Q: must she

A: An installment that is paid on monthly basis is called PMT. A fixed amount of interest is to be…

Q: esslyn has just given an insurance company RM1 million, a sum of money she just received from her…

A: The given problem can be solved using RATE function in excel. RATE function provides interest rate…

Q: Bill and Cathy will be retiring in fifteen years and would like to buy an Italian villa. The villa…

A: Time value of money states that a dollar is worth more today than sometimes later. This is because…

Q: Charles has just taken on the conditions of the loan, he must make payments of $1,200 per year for…

A: Amount of loan is the present value of the annual payments of the loan based on the time and…

Q: Tanya wants to be able to withdraw $7000 at the end of 7 years and $9000 at the end of 8 years. If…

A: Present value is the value of future cashflow discounted to present date at specified rate. formula:…

Q: Tara has just bought a house for $930,000 with a 30% down payment and a 70% mortgage loan for 20…

A: Given: Cost of house = $930,000 Down payment = 30% Interest rate = 2.19% Years = 20

Q: determine if Elora would be able to buy the land

A: First we need to determine the effective annual interest rate using the formula below:

Q: Margarita borrows R10,000 from her uncle and agrees to repay it in monthly instalments of R200. Her…

A: Loans are paid in equal monthly payments and these payments carry the payment for interest and…

Q: Sarah secured a bank loan of $150,000 for the purchase of a house. The mortgage is to be amortized…

A: A mortgage is a loan used to purchase a property or real estate. The property serves as collateral…

Q: Rachel purchased a car for $20,000 three years ago using a 4-year loan with an interest rate of 9.0…

A: Annuity refers to a series of regular payments made over a set or defined period. When the payments…

Q: Rachael also wishes to save for retirement. She can comfortably afford to invest R8 500 at the end…

A: Firstly calculate future value of annuity = P*[((1+r)^n)-1]/r Where P =Periodic payment i.e. 8500 r…

Q: Your uncle has P375,000 and wants to retire. He expects to live for another 25 years, and he also…

A: This is annuity due  Using excel PMT function to calculate amount withdraw

Q: Allison is considering paying $400 a year for an extended warranty on several of her major…

A: Rate of interest =2% Period =5 years  Payment =$400 per year  Future value FACTOR =(1+r)n/r Future…

Q: Ali buys an apartment for RM150,000. He makes a 10% down payment and finances the balance through…

A: Loan amount (L) = Price - Down payment = 90% of RM 150000 = RM 135000 Monthly payment (M) = RM…

Q: Erika inherits $20,000, and decides to invest it in an account earning 6.25% interest, compounded…

A: Formula Future value = PV*(1+i)n Where PV - Investment i.e. $20,000 i - Semi annual interest rate…

Q: Sarah secured a bank loan of $155,000 for the purchase of a house. The mortgage is to be amortized…

A: When a loan is taken to buy a big ticket item like a house the borrower usually makes monthly…

Q: Leon wants to save a classic car so he deposits $1500 at the end of the years into a savings account…

A: We need to use future value of ordinary annuity formula to calculate worth of deposit after 5 years.…

Q: Layla has inherited $20000 from her grandmother.she plans to use 25% of it to put a down payment on…

A: The future value is the future worth of the amount that will be paid or received in the future.

Q: Stephanie borrows Php77,000 for 10 months at an interest rate of 12% per year. Find the interest…

A: Interest earned refers to the product of amount invested/borrowed, time period and interest rate.

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.