e has just earned his pilot’s licence. He has saved $50,000 and has decided to use that as a down payment on a new $200,000 aircraft. His loan of $150,000 has a 3.5% quoted annual rate, compounded monthly, over a four-year term and an amortization period of 20 years. George makes payments at the end of each month on the loan.   Required: a) Calculate the monthly pay

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
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George has just earned his pilot’s licence. He has saved $50,000 and has decided to use that as a down payment on a new $200,000 aircraft. His loan of $150,000 has a 3.5% quoted annual rate, compounded monthly, over a four-year term and an amortization period of 20 years. George makes payments at the end of each month on the loan.

 

Required:

a) Calculate the monthly payment required on the loan.

b) After four years, George plans to sell the aircraft and pay off the loan, but he also needs $80,000 for other projects. How much will he need to sell the aircraft in order to pay off the principal of the loan and still have $80,000 left over? (For the purposes of this calculation, ignore any tax implications.)

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