Elikplim Atayo took a loan facility of ¢1,000,000 from Amegbletor Bank ltd. He agreed to repay the loan monthly over a period of ten years. The interest charged by the bank is 6% per year, compounded monthly. If Elikplim Atayo repays the loan at the end of each month, Calculate the amount Elikplim will pay on monthly for the settlement of the loan
Elikplim Atayo took a loan facility of ¢1,000,000 from Amegbletor Bank ltd. He agreed to repay the loan monthly over a period of ten years. The interest charged by the bank is 6% per year, compounded monthly. If Elikplim Atayo repays the loan at the end of each month, Calculate the amount Elikplim will pay on monthly for the settlement of the loan
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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A mortgage is a formal agreement in which a bank or other financial institution lends cash at interest in return for assuming the title to the debtor's property, on the condition that the obligation is paid in full.
Mortgage
The term "mortgage" is a type of loan that a borrower takes to maintain his house or any form of assets and he agrees to return the amount in a particular period of time to the lender usually in a series of regular equally monthly, quarterly, or half-yearly payments.
Question
a). Elikplim Atayo took a loan facility of ¢1,000,000 from Amegbletor Bank ltd. He agreed to repay the loan monthly over a period of ten years. The interest charged by the bank is 6% per year, compounded monthly. If Elikplim Atayo repays the loan at the end of each month, Calculate the amount Elikplim will pay on monthly for the settlement of the loan.
b). GCB Ltd issued 10m of new bonds with ¢1000 face value. The bonds have 10 years to maturity and carries 5% coupon rate. If the rate of return is 6%, how much is the corporation borrowing? What type of bond is this?
c). Mr. Adomako and Mr. Bonsu are vice presidents of Databank Mutual Insurance Company and co-directors of the company’s pension fund management division. An important new client, the Ghana Municipal Assembly Alliance, has requested that Databank present an investment seminar to the mayors of the represented cities, and Mr. Adomako and Mr. Bonsu who will make the actual presentation, have asked you to help them by answering the following question.
What are the key features of a bond as compared to a stock?
d). Sims Ltd has just announced a dividend of ¢10 on its ordinary shares. Given that dividends are expected to grow at a constant rate of 10 percent over a long period of time and the investor’s required return is 14 percent? Using the dividend valuation model, calculate a fair price for Sims Ltd equity share.
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