(Compound interest with nonannual periods) After examining the various personal loan rates available to you,you find that you can borrow funds from a finance company at an APR of 6 percent compounded weekly orfrom a bank at an APR of 7 percent compounded quarterly. Which alternative is more attractive?a. If you borrow $100 from a finance company at an APR of 6 percent compounded weekly for 1 year, howmuch do you need to payoff the loan?(Round to the nearest cent.)

Payoff of the loan is calculated using the future value formula. Future value formula is as…

Answered: (Compound interest with nonannual…

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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Similar questions

Suppose you take a 6 year loan of $50,000 with an annual interest rate of 13% and monthly payments starting at the end of year 1. What are the monthly loan payments? Enter your response below.
Suppose that you decide to borrow $15,000 for a new car. You can select one of the following loans, each requiring regular monthly payments. Installment Loan A: three-year loan at 6.3% Installment Loan B: five-year loan at 4.8% PA [¹-(1+] Use PMT= -nt7 to complete parts (a) through (c) below. a. Find the monthly payments and the total interest for Loan A. The monthly payment for Loan A is $. (Do not round until the final answer. Then round to the nearest cent as needed.)
Answer the following question using a spreadsheet and the material in the appendix. You would like to buy a house. Assume that given your income, you can afford to pay $12,000 a year to a lender for the next 30 years. If the interest rate is 7% how much can you borrow today based on your ability to pay? What about if the interest rate is 3%? Maximum mortgage at 7%: $ Maximum mortgage at 3%: $
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Suppose that you decide to borrow $15,000 for a new car. You can select one of the following loans, each requiring regular monthly payments. Installment Loan A: three-year loan at 6.3% Installment Loan B: five-year loan at 5.2% Use PMT= nt] to complete parts (a) through (c) below. The total interest for Loan A is $1501.35. (Round to the nearest cent as needed.) b. Find the monthly payments and the total interest for Loan B. The monthly payment for Loan B is $284.42 (Do not round until the final answer. Then round to the nearest cent as needed.)
After examining the various personal loanrates available toy, you find the can borrow funds from an investment company at 12%Compounded monthly or from a bank at 13% compounded annually. Which alternative is the most attractive?
Your local loan shark offers weekly payday loans: You can borrow $1,000 and pay back $1,050 one week later (or lose a finger or two). a. What is the effective annual rate on the loan? b.
You can afford monthly payments of $800. If current mortgage rates are 3.06% for a 15-year fixed rate loan, how much can you afford to borrow? If you are required to make a 20% down payment and you have the cash on hand to do it, how expensive a home can you afford? (Hint: You will need to solve the loan payment formula for P.)
After examining the various personal loan rates available to you, you find that you can borrow funds from a finance company at 8 percent compounded or from a bank at 9 percent compounded . Which alternative is more attractive?
If you borrow $30,000 from a bank for 7 years at an interest rate of 8.5%, how much will you owe in balloon payment at the end of the loan's term? This is a balloon loan with all payment due at the end. Round to the nearest dollar. Type your numeric answer and submit
Suppose your gross monthly income is $5,300 and your current monthly payments are $575. If the bank will allow you to pay up to 36% of gross monthly income (less current monthly payments) for a monthly house payment, what is the maximum loan you can obtain if the rate for a 30-year mortgage is 4.65%? (Round your answer to the nearest cent.)

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