CASE: A man is currently paying on a monthly basis his 300,000-peso salary loan made ayear ago. He has two more years left to extinguish the loan but unfortunately, he lost his joband thought he cannot anymore afford to pay the monthly amortization payments. He hasplans to get back on his feet and to he requested the bank to have his loan re-structured sothat he will be paying the balance with the SAME amortization amount but on a quarterlybasis. The financing institution granted his request. Assume a constant interest rate of 15%per compounded annually, answer the following questions.Questions:1. How much is the amortization payments?2. For how long will the man be paying the remaining balance?3. CONSTRUCT THE CASH FLOW DIAGRAM4. Construct the amortization table.

Given: Loan is Pesos 300,000 Years is 3 Interest rate = 15%

Answered: CASE: A man is currently paying on a…

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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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?
Mr. Reyes borrowed from the bank an amount of P326,000 today to be paid after 5 years. This was done at an interest rate of 5% compounded semi-annually. But, when the 5 year limit was reached, Mr. Reyes does not have the capacity to pay. Therefore, the bank let Mr. Reyes renew the borrowed amount plus the interest for another 5 years but under the condition of making monthly payments at the same interest rate. How much will Mr. Reyes pay monthly?
Ten years ago Jim took a mortgage loan of $200,000 to be repaid in 20 equal annual installments of $30,197.34. The bank has told him that they would accept $145,000 today as payment in full for the remainder of the loan. What is the balance on this loan? If we assume that Jim has the money, what interest rate must he earn on alternative investments in order not to accept the bank offer?
Earl Ezekiel wants to retire in San Diego when he is 65 years old. Earl is now 49. He believes he will need $470,000 to retire comfortably. To date, Earl has set aside no retirement money. Assume Earl gets 10% interest compounded semiannually. How much must Earl invest today to meet his $470,000 goal? (Use the Table provided.) (Do not round intermediate calculations. Round your answer to the nearest dollar amount.) Investment
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.
David obtained a fully amortizing loan 8 years ago for $12,0000 at 8% for 30 years. Mortgage rates have dropped in such a manner so as to provide a loan for 22 years at 6.5%. There is no prepayment penalty on the mortgage balance of the original loan, but 2 points will be charged on the new loan and other closing cost will be $3000. All payments are monthly. How much does David need to borrow if he decides to borrow only outstanding loan balance? Is refinancing a good option if David decides to repay the full amount of loan in 5 more years? How would your answer for part 2a change if David decides to borrow outstanding loan balance and other refinancing costs? Would your answer for part 2b change if David decides to keep the loan for full term of the loan?
Austin is taking out an amortized loan for $94,000 to open a small business and is deciding between the offers from two lenders. He wants to know which one would be the better deal over the life of the small business loan, and by how much. Answer each part. Do not round intermediate computations, and round your answers to the nearest cent. If necessary, refer to the list of financial formulas. (a) A bank has offered him a 10-year small business loan at an annual interest rate of 11.3%. Find the monthly payment. (b) An online lending company has offered him a 8-year small business loan at an annual interest rate of 14.2%. Find the monthly payment. re) Suppose Austin pavs the monthly pavment each month for the full t 2021 Continue %23 & 2 3 7.
simon's cost for a new computer with accessories was $3120. he made a down payment of $550 in finance the balance on a 24 month fixed payment installment loan. The monthly payments are $111.73. Instead of making his 18th payment, Simon decides to pay the total remaining balance and terminate the loan. How much is interest will Simon save? Simon will save $___ in interest. round to nearest cent
A new employee charged $7160 on his credit card to relocate for his first job. After noticing that the interest rate for his balance was 15% compounded monthly, he stopped charging on that account. He wishes to pay off his balance in 3 years using automatic payments sent at the end of each month. a. What monthly payment must he make to pay off the account at the end of 3 years? b. How much total interest will he have paid?
David is borrowing $150,000 from Hartford Bank to open Road and Off-Road Bicycle Shop. David expects it to take a few years before the shop earns a sizeable profit, so he has arranged for no payments on the loan until the end of the fourth year. The first and second payments are due 4 and 5 years, respectively, from today in the amounts of $20,000 each. Starting at the end of year 6, a series of 4 annual end-of-year payments will be made. The first of these is $X. Each subsequent payment is $8,000 greater than the previous payment. Draw the cash flow diagram from David’s perspective.
A 40 year old woman puts $1500 in a retirement account at the end of each quarter through 20 years then stops making further deposits. She keeps money in her account for the next 5 years. How much will she have in her account when she retires at the age of 65 if the bank pays interest at 6.4% compounded quarterly? SOLVE WITHOUT A SPREADSHEET. written out by hand.
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 $124,000 at 7.5%, compounded monthly. They make their regular monthly payments for 5 years, then decide to pay $1400 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 $1400. (Round your answer to the nearest cent.) $ (c) How many payments of $1400 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

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