Bridgit has purchased a new home at auction for $655,000. To be able to pay for the house, she takes out a reducing balance loan from the bank for the sum of $520,000. The bank charges interest at the rate of 8.75%, compounding quarterly. Bridgit plans to pay off the loan over a period of 20 years. a. What quarterly instalment must Bridgit pay the bank? Express your answer to the nearest cent. b. How much interest will Bridgit pay over the period of the loan? 0 1 c. Complete the amortization table for the first 2 payments made on this loan. Quarter Payment Interest Principal reduction 2 0 Working space provided: 0 122 0 Balance $520,000

Bridgit has purchased a new home at auction for $655,000. To be able to pay for the house, she takes out a reducing balance loan from the bank for the sum of $520,000. The bank charges interest at the rate of 8.75%, compounding quarterly. Bridgit plans to pay off the loan over a period of 20 years. a. What quarterly instalment must Bridgit pay the bank? Express your answer to the nearest cent. b. How much interest will Bridgit pay over the period of the loan? 0 1 c. Complete the amortization table for the first 2 payments made on this loan. Quarter Payment Interest Principal reduction 2 0 Working space provided: 0 122 0 Balance $520,000

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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Theodora received an 8-year PLUS Loan of $17,000 to attend law school for her last 2 years. If the current interest rate is 5.32% and she starts her repayments 1 year after graduation, what are her monthly payments? (See Example 5 in this section. Assume the loan has a deferred payment plan. Round your answer to the nearest cent.)
Julio buys a koi fishpond (and fish to put in it for his wife on their anniversary. He pays $8000 for the pond and fish with $2000 down. The dealer charges add-on interest of 3.5% per year, and Julio agrees to pay the loan with 36 equal monthly payments. Use this information to answer the following questions: 1) Find the total amount of interest he will pay. 2) Find the monthly payment. 3) Find the APR value (to the nearest half percent). 4) Find (a) the unearned interest and (b) the payoff amount if he repays the loan in full with 12 months remaining. Use the most accurate method available.
Sanvij has bought a house in Chilliwack for $20,000. He makes a 5% down payment and will be making quarterly payments of $388. 63 to Scotia Bank for 15 years. What nominal rate of interest compounded semiannually was applied to the purchase?
Darla purchased a new car during a special sales promotion by the manufacturer. She secured a loan from the manufacturer in the amount of $23,000 at a rate of 4.5%/year compounded monthly. Her bank is now charging 6.6%/year compounded monthly for new car loans. Assuming that each loan would be amortized by 36 equal monthly installments, determine the amount of interest she would have paid at the end of 3 years for each loan. How much less will she have paid in interest payments over the life of the loan by borrowing from the manufacturer instead of her bank?
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Erin has a mortgage of $640,000 through the Tangerine Bank for a vacation property. The mortgage is repaid by end of month payments with an interest rate of 5.3% compounded monthly for a term of 5 years, amortized over 25 years. At the end of the 5-year term, Erin will renew the mortgage for another 5-year term at a new, lower interest rate of 4.4% compounded monthly. Round ALL answers to two decimal places if necessary. 1) What are the end of month payments before the renewal of the mortgage? P/Y = 12 I/Y = 0.4 P1 = 640,000 X x% P/Y = 12 2) What is the balance when the mortgage is renewed? I/Y = 0.03 C/Y = 12 PV = $ 640,000 x% PMT= $3,854.09 (enter the rounded value into the calculator) P2= 70,408.34 X 3) What will be the new end of month payments after the mortgage is renewed? C/Y = 12 PV = $5,69,591.66 X N = 300 PMT $3,572.84 FV = $0 BAL= $5,69,591.66 x Enter a positive value. N = 240 FV = $0
Victoria buys a property for $2,500,000 by paying $500,000 down payment and the rest on a 15-year credit with a 12% annual capitalizable interest rate each month. How much of the 55th payment is used to cover interest?
John is planning to take a loan for a major renovation project for his home. He can afford only 10% of his annual gross salary for the payment of the loan. John makes $80,000 annually. The bank offered him a loan at 8% annual interest rate for 5 years to be paid monthly. Calculate the amount of the loan he should ask for: Group of answer choices $9282 ($44, 386.59) ($36, 988.83) $49,999
An oil-drilling company must choose between two mutually exclusive extraction projects, and each requires an initial outlay at t = 0 of $12 million. Under Plan A, all the oil would be extracted in 1 year, producing a cash flow at t 1 of $14.4 million. Under Plan B, cash flows would be $2.1323 million per year for 20 years. The firm's WACC is 12.8%. a. Construct NPV profiles for Plans A and B. Enter your answers in millions. For example, an answer of $10,550,000 should be entered as 10.55. If an amount is zero, enter "0". Negative values, if any, should be indicated by a minus sign. Do not round intermediate calculations. Round your answers to two decimal places. Discount Rate NPV Plan A NPV Plan B 0% $ million $ million 5 million million 10 million million 12 million I million 15 million 17 20 million million million million million Identify each project's IRR. Do not round intermediate calculations. Round your answers to two decimal places. Project A: % Project B: % Find the crossover…
Linda borrowed money from a bank to buy a fishing boat. She took out a personal, amortized loan for $13,500, at an interest rate of 4.35%, with monthly payments for a term of 4 years. For each part, do not round any intermediate computations and round your final answers to the nearest cent. If necessary, refer to the list of financial formulas. (a) Find Linda's monthly payment. S (b) If Linda pays the monthly payment each month for the full term, find her total amount to repay the loan. s (c) If Linda pays the monthly payment each month for the full term, find the total amount of interest she will pay. $0 X ?
Angelica received a 12 year non-subsidized student loan of $12,000 at an annual interest rate of 5.6% (compounded monthly). Determine her monthly payment on the loan after she graduates in 4 years. round your answer to the nearest cent.
Emma plans to loan $1,000 to her friend, who will pay a simple interest rate of 5.8% every year for the loan. If no payments are made and no further borrowing occurs between them for 13 years, then how much money will Emma' s friend owe her? $1,061.36 $1,754.00 $2,081.20 $158.00 Now, assume that Emma's friend volunteers to pay compound interest instead of simple interest for her loan. If interest is accrued at 5.8% compounded annually, all other things being equal, how much money will Emma's friend owe her in 13 years? $2,081.20 $1,058.00 $120.71 $ 1,754.00 Emma has another investment option in the market that pays 5.8% nominal interest, but it's compounded quarterly. Keeping everything else constant, how much money will Emma have in 13 years if she invests $1,000 in this fund? $158.00 $129.72 $2,114.01 $1,059.27

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