CASE: A man is currently paying on a monthly basis his 300,000-peso salary loan made a year ago bearing a constant interest of 15% compounded annually. He has two more years left to extinguish the loan but unfortunately, he lost his job and thought he cannot anymore afford to pay the monthly amortization. He was so broke and lost hope so that he withdrew to his hometown in a far-flung sitio in the province of Region X. So he defaulted and for five months he was not heard of. During this time also he started a small poultry farm which he saw doing well at 60,000-peso quarterly net income, he negotiated his bad debt and a new term for repayment was offered in that he pays 25% of the total balance of the loan with the penalties (6.5% of the unpaid balance) and amortizes the rest for a year at 15% per annum.

CASE: A man is currently paying on a monthly basis his 300,000-peso salary loan made a year ago bearing a constant interest of 15% compounded annually. He has two more years left to extinguish the loan but unfortunately, he lost his job and thought he cannot anymore afford to pay the monthly amortization. He was so broke and lost hope so that he withdrew to his hometown in a far-flung sitio in the province of Region X. So he defaulted and for five months he was not heard of. During this time also he started a small poultry farm which he saw doing well at 60,000-peso quarterly net income, he negotiated his bad debt and a new term for repayment was offered in that he pays 25% of the total balance of the loan with the penalties (6.5% of the unpaid balance) and amortizes the rest for a year at 15% per annum.

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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Tina has saved $23000 from her summer jobs. Rather than work for a living, she plans to buy an annuity from a trust company and become a beachcomber in Fiji. An annuity will pay her a certain amount each month for the rest of her life and is calculated at 5 percent interest, compounded monthly, over Tina's 55 remaining years. Tina calculates that she needs at least $5 per day to live in Fiji, and she needs $1200 for airfare. How much would she have available to spend each day? $3.19 $4.79 $2.39 $6.38
Selly sold his car to Buyie for 120,000 payable in 12 equal installments of 10,000 each month. As a security Buyie executed a chattel mortgage on the car. What is the remedy if he defaulted to pay one installment?a. Exact fulfillmentb. Cancel the salec. Foreclose the chatteld. All of the abovee. None of the Above
1 Ann and Sue sell their recreation property. They make $245,000 on the sale and deposit it immediately into a retirement fund. The fund earns 2.45%, compounded monthly, for the entire time. Exactly ten years after the sale, Ann retires. They now want to start supplementing their income with payments from the retirement fund. They want the payments to start one month after Ann retires. They want these payments to last for 5 years. How much can they withdraw per month from the retirement fund? (ANNUITY)
Ms. Ligaya wants to buy her dream car. However, she does not have enough money to pay for ₱5,000,000 full price of the car. She negotiated with the sales agent and paid a down payment of ₱2,000,000 and borrowed ₱3,000,000 from Pure Gold Bank and signed a 4-year note payable stating the interest rate was 4% compounded annually. Ms. Ligaya will make payments of ₱826,470.14 at the end of each year. How much will be the principal amortization on the 2nd payment? (Provide solution/ explanation)a. ₱706,470 b. ₱724,118 c. ₱734,729 d. ₱754,683
A contractor decided to borrow $7000 from a bank in order to buy an equipment for his company. The bank allows him pay back his loan in five years at a monthly interest rate of 2%. the farmer can pay $71 per month but can increase his monthly payment by a certain value in arithmetic way (G value). What should be the G value so that he finished the loan by the end of five years? O $ 243326.21 O $ 4531.98 O $ 3.00 O $ 5.50 O $ 9468.02
Bob has lost his job and had to move back in with his mother. She agreed to let Bob have his old room back on the condition that he pay her $250 rent per month, and an additional $1500 every other year to pay for her biannual jaunt to Florida. Since he is down on his luck, she will allow him to pay his rent at the end of the year. If inflation is 3% and Bob’s interest rate is 5%, how much is the present cost (in Year-1 dollars) for a 5-year contract with mom? (Note: Mom’s trips are in Years 2 and 4).
For the past 6 months, Richard was unable to pay the monthly amortization of 18,000 pesos on his car loan. As a result, he was charged annual interest rate of 15% compounded monthly as penalty for the late payment. Because of the length of delay, the bank is threatening to repossess the vehicle if the outstanding balance is not paid in full. How much is Richard required to pay today to prevent this from happening?
that explains why Tim does or does not have enough money to pay $200 each month on his credit card. If he does have enough, give him some advice as to whether or not paying $200 each month on his credit card is a good idea. If he does not have enough, give him some advice about what he should do instead. Assume all of his taxes And expenses are as listed in #1-3, and assume that he is 20 years old and is wanting to retire at age 65. Tim will pay 5,812.5 for federal taxes 2,544.8 is the amount Tim takes home each month. Total monthly expenses= $2,15
A financial engineer designs a new financial instrument that she calls the SafetyNet. This instrument gives the holder access to the following cashflows: • For the first 4 years, the holder receives $95 per year starting one year from today (a total of 4 payments). • The holder does not receive any cashflows for year 5. • Starting at the end of year 6, the holder receives $60 growing at a rate of 4% per year forever. • The holder has to pay a “service fee” of $7 every year starting at the end of year 2; this goes on forever. The prevailing discount rate throughout is 6%. The financial engineer would like to determine a fair market price for this financial instrument. What do you suggest this price to be? Please show your work.
Five years ago, alex loaned his son Liam $20,000 to start a business. A note was executed with an interest rate of 8%, which is the Federal rate. The note required monthly payments of the interest with the $20,000 due at the end of 10 years. Liam always made the interest payments until last year. During the current year, Liam notified his father that he was bankrupt and would not be able to repay the $20,000 or the accrued interest of $1,800. Tom is an accrual basis taxpayer whose only income is salary and interest income. The proper treatment for the nonpayment of the note is: a.$3,000 deduction. b.$20,000 deduction. c.No deduction. d.$21,800 deduction.
This problem is a complex financial problem that requires several skills, perhaps some from previous sections.Clark and Lana take a 30-year home mortgage of $122,000 at 7.4%, compounded monthly. They make their regular monthly payments for 5 years, then decide to pay $1300 per month. (a) Find their regular monthly payment. (Round your answer to the nearest cent.)$ (b) Find the unpaid balance when they begin paying the $1300. (Round your answer to the nearest cent.)$ (c) How many payments of $1300 will it take to pay off the loan? Give the answer correct to two decimal places. monthly payments(d) Use your answer to part (c) to find how much interest they save by paying the loan this way. (Round your answer to the nearest cent.)
An engineer changed jobs and is signing up for benefits. The company 401(k) includes a low-cost fund that is expected to earn 5.3% annually. The engineer’s employer will contribute up to 2% by matching half the employee contribution. So she will save at least 4% of her salary of $80,000 into the account. She expects her salary to increase 2.5% per year. What is the value of the account after 15 years if she deposits the 4% minimum?

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