Calculate the CAT (total annual cost) for option 1 and then find which option is better to ask for a loan and explain why is it better. 1. Personal Loan MNL Bank 2.25% simple monthly interest rate 2. Savings Bank CAT= 30% 3. XYZ Bank CAT= 28.30% 4. 123 Bank CAT= 26.64%

Calculate the CAT (total annual cost) for option 1 and then find which option is better to ask for a loan and explain why is it better. 1. Personal Loan MNL Bank 2.25% simple monthly interest rate 2. Savings Bank CAT= 30% 3. XYZ Bank CAT= 28.30% 4. 123 Bank CAT= 26.64%

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

See similar textbooks

Related questions

Q: Calculate the amount financed, the finance charge, and the monthly payments (in $) for the add-on…

A: Formula: Finance charge = Amount financed x add on interest x ( 30 / 12 ) Monthly payment = [ (…

Q: Choose the correct description of a simple interest loan. A. Home Mortgage loans B. Short term loans…

A: In the simple interest there is no interest on interest and there is no compounding of interest and…

Q: Please show all equations and work as needed. Make the correct answer clear. If possible, please…

A: The computation of net amount is as follows:Hence, the net amount of funds from the loan is $511560.…

Q: Find the maturity value of a loan of $2,400.00 after three years. The loan carries a simple interest…

A: Simple interest refers to the method of calculating the interest amount. Under this method, the rate…

Q: Enter your search term You want to buy a $165,000 home. You plan to pay 20% as a down payment, and…

A: As per the time value of money, a dollar is worth more today than the same dollar in the future.…

Q: Calculate the table factor, the finance charge, and the monthly payment (in S) for the loan by using…

A: When a loan is repaid through equally monthly payment, the monthly payment includes interest and…

Q: Your current bank is paying 6.25% simple interest rate. You can move your savings account to Harris…

A: Effective rate is the rate after consdering the impact of compounding on the interest due to which…

Q: suppose that you decide to borrow $15,000 for a new car. you can select one of the following loans,…

A: a.Loan ALoan Amount (pv) = $15,000Interest Rate (rate) = 5.9%Time Period = 3 YearsNumber of Payments…

Q: Calculate the amount financed, the finance charge, and the monthly payments (in $) for the add-on…

A: Cash Price = $6000 Down payment = 15% Interest rate = 13.5 / 12 = 1.125% Number of payment = 30

Q: You are considering the following fixed interest rate mortgage loan alternatives: Alternative 1:…

A: In order to calculate the incremental cost of borrowing, we will have to use the difference in the…

Q: The First Bank of Lending lists the following APR for loans. Determine the APY, or effective…

A: Annual percentage rate (APR) is the annual interest rate paid on an amount borrowed or received on…

Q: Using the information provided please show all work and formulas in excel ! Suppose that you have…

A: Incremental borrowing cost refers to an expense that is incurred for taking an extra amount of loan…

Q: Use Goal seek on the loan amount of $825,000. You would like the monthlypayment to be $4500.00. Find…

A: The objective of this question is to use the Goal Seek function in Excel to find a solution for a…

Q: borrower has two alternatives for a loan: (1) issue a $510,000, 75-day, 8% note or (2) issue a…

A: When the money is provided to another person for the fixed time period, and upon the fixed interest…

Q: You are looking to buy a $275,599.00 home in Haverhill. If Bank of America will give them a 30-year…

A: Hi There, thanks for posting the question. But as per Q&A guidelines, we must answer the first…

Q: All else equal, when deciding between two loan offers the loan that should be accepted is the one:…

A: We have a multiple choice question on the key factor influencing the decision between two loan…

Q: Compare the following two loans and answer the following 2 questions. Loan Option1: $183,000; 5.50%;…

A: A mortgage refers to a loan that is taken out by the borrower to purchase a property. The concept of…

Q: If you were opening a savings account with compound interest, would you prefer an account that…

A: Hi, there, Thanks for posting the question. As per our Q&A honour code, we must answer the first…

Q: 1. Barry is going to post-secondary school for three years. Should Barry get a Student Loan or…

A: “Since you have posted a question with multiple sub-parts, we will solve the first three sub-parts…

Q: If you could solve Option 1 with formulas that would be awesome! Option 1: use $400,000 cash…

A: As requested, solution is provided for Option 1. Given; Amount required = 4,600,000 Interest rate…

Q: Calculate the amount financed, the finance charge, and the monthly payments (in $) for the add-on…

Q: The first product Suzie represents is a short term loan. Here, customers can borrow small amounts of…

A: Simple Interest: When the interest is charged or paid on a fixed principal over a given period is…

Question

Calculate the CAT (total annual cost) for option 1 and then find which option is better to ask for a loan and explain why is it better.

1. Personal Loan

MNL Bank

2.25% simple monthly interest rate

2. Savings Bank

CAT= 30%

3. XYZ Bank

CAT= 28.30%

4. 123 Bank

CAT= 26.64%

Expert Solution

This question has been solved!

Explore an expertly crafted, step-by-step solution for a thorough understanding of key concepts.

SEE SOLUTION Check out a sample Q&A here

Step 1

VIEW

Step 2

VIEW

Step by step

Solved in 2 steps with 2 images

SEE SOLUTION Check out a sample Q&A here

Similar questions

Use the following information to solve for both the levered and unleved NPV & IRR Please note: mortgage and income numbers are to be annual numbers, not monthly Potential Investment Purchase Price Years: LTV Rate Ongination Expenses ΝΟΙ Required Return Levered Required Return Un-Levered Expected Price Appreciation) Selling expenses Expected holding period Price: Mortgage Loan Exp CFO Loan Information N IN 0 $700,000.00 30 80.0% 7.0% 3.0% $75,000.00 13,0% 10.0% 4.0% 5.0% 2 100% PV PAID ANNUALLY of the loan amount Per Year Years of the sale price Years NOI MTG Pynt CF1 PMT EV NOI MTG Pymt Net Sales Price: Mortgage Payoff CF2 Levered CF-0 CF-1 CF-2 NPV = IRR = Un-Levered CF-0 CF-1 CF-2 NPV = IRR= Equity Reversion Sale Price Selling Expenses Net Sales Price Mortgage Payoff BTER
This is a loan problem with multiple parts please read and answer questions carefully.
Please answer with explanation. I will really upvote. Thanks
Calculate the amount financed, the finance charge, and the monthly payments (in $) for the add-on interest loan. (Round your answers to the nearest cent.) Purchase Add-on Number of Finance Monthly Payment Down Amount (Cash) Price Payment Financed Interest Payments Charge 145% $2,000 15% 24 1,700 30 $ 616.30 $ 77.21
Calculate the amount financed, the finance charge, and the monthly payments (in $) for the add-on interest loan. (Round your answers to the nearest cent.) Purchase (Cash) Price Down Payment Amount Financed Add-on Interest Number of Payments Finance Charge $50,500 25% 37875 10.8% 60 $ Monthly Payment
Suppose you are shopping for a mortage and the lender presents you with long menu on loan options. For each option, there is a discount point charged at an interest rate given. The amount of the point ranges anywhere from -2% to 3%. When would it be optimal for you select a loan with a discount point of 3%? Group of answer choices 1) Only when the point is equal to the effective borrowing cost 2) Never 3) Only with ARM 4) If you have a very short holding period 5) If you have a very long holding period
K Compare the monthly payments and total loan costs for the following pairs of loan options. Assume that both loans are fixed rate and have the same closing costs. You need a $110,000 loan. Option 1: a 30-year loan at an APR of 8.5%. Option 2: a 15-year loan at an APR of 8%. Find the monthly payment for each option. The monthly payment for option 1 is $ The monthly payment for option 2 is $ (Do not round until the final answer. Then round to the nearest cent as needed.)
K Compare the monthly payments and total loan costs for the following pairs of loan options. Assume that both loans are fixed rate and have the same closing costs. You need a $160,000 loan. Option 1: a 30-year loan at an APR of 9%. Option 2: a 15-year loan at an APR of 8.5%. Find the monthly payment for each option. The monthly payment for option 1 is $ The monthly payment for option 2 is $ (Do not round until the final answer. Then round to the nearest cent as needed.) Find the total amount paid for each option. The total payment for option 1 is $ The total payment for option 2 is $ (Use the answers from the previous step to find this answer. Round to the nearest cent as needed.) Compare the two options. Which appears to be the better option? OA. Option 1 is the better option, but only if the borrower plans to stay in the same home for the entire term of the loan. OB. Option 1 will always be the better option.
Need all four quest...
Calculate the amount financed, the finance charge, and the monthly payments (in $) for the add-on interest loan. (Round your answers to the nearest cent.) Purchase(Cash)Price DownPayment AmountFinanced Add-onInterest Number ofPayments FinanceCharge MonthlyPayment $6,000 15% $ 12 1 2 % 30 $ $
Calculate the table factor, the finance charge, and the monthly payment (in $) for the loan by using the APR table, Table 13-1. (Round your answers to the nearest cent.) Monthly Payment Amount Number of Table Finance APR Financed Payments Factor Charge $9,300 36 13% $ Need Help? Read It Viewing Saved Work Revert to Last Response Submit Answer
Would enjoy the help. 2

SEE MORE QUESTIONS

Recommended textbooks for you

Essentials Of Investments

Finance

ISBN:

9781260013924

Author:

Bodie, Zvi, Kane, Alex, MARCUS, Alan J.

Publisher:

Mcgraw-hill Education,

FUNDAMENTALS OF CORPORATE FINANCE

Finance

ISBN:

9781260013962

Author:

BREALEY

Publisher:

RENT MCG

Financial Management: Theory & Practice

Finance

ISBN:

9781337909730

Author:

Brigham

Publisher:

Cengage

Foundations Of Finance

Finance

ISBN:

9780134897264

Author:

KEOWN, Arthur J., Martin, John D., PETTY, J. William

Publisher:

Pearson,

Fundamentals of Financial Management (MindTap Cou…

Finance

ISBN:

9781337395250

Author:

Eugene F. Brigham, Joel F. Houston

Publisher:

Cengage Learning

Corporate Finance (The Mcgraw-hill/Irwin Series i…

Finance

ISBN:

9780077861759

Author:

Stephen A. Ross Franco Modigliani Professor of Financial Economics Professor, Randolph W Westerfield Robert R. Dockson Deans Chair in Bus. Admin., Jeffrey Jaffe, Bradford D Jordan Professor

Publisher:

McGraw-Hill Education

Essentials Of Investments

Finance

ISBN:

9781260013924

Author:

Bodie, Zvi, Kane, Alex, MARCUS, Alan J.

Publisher:

Mcgraw-hill Education,

FUNDAMENTALS OF CORPORATE FINANCE

Finance

ISBN:

9781260013962

Author:

BREALEY

Publisher:

RENT MCG

Financial Management: Theory & Practice

Finance

ISBN:

9781337909730

Author:

Brigham

Publisher:

Cengage

Foundations Of Finance

Finance

ISBN:

9780134897264

Author:

KEOWN, Arthur J., Martin, John D., PETTY, J. William

Publisher:

Pearson,

Fundamentals of Financial Management (MindTap Cou…

Finance

ISBN:

9781337395250

Author:

Eugene F. Brigham, Joel F. Houston

Publisher:

Cengage Learning

Corporate Finance (The Mcgraw-hill/Irwin Series i…

Finance

ISBN:

9780077861759

Author:

Stephen A. Ross Franco Modigliani Professor of Financial Economics Professor, Randolph W Westerfield Robert R. Dockson Deans Chair in Bus. Admin., Jeffrey Jaffe, Bradford D Jordan Professor

Publisher:

McGraw-Hill Education

SEE MORE TEXTBOOKS