He also wonders if there are different types of interest rates. AJ then computed his interest for the entire five years to be Php. 15,000. Question: Is AJ correct in computing the interest? How much should AJ pay in total and would the equipment be worth the payment?
He also wonders if there are different types of interest rates. AJ then computed his interest for the entire five years to be Php. 15,000. Question: Is AJ correct in computing the interest? How much should AJ pay in total and would the equipment be worth the payment?
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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Concept explainers
Mortgages
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
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He also wonders if there are different types of interest rates. AJ then computed
his interest for the entire five years to be Php. 15,000.
Question: Is AJ correct in computing the interest? How much should AJ pay in total
and would the equipment be worth the payment?
Analysis
Simple Interest Rates Versus Compound Interest Rates
Transcribed Image Text:Basic LUng
LESSON 7
Introduction
You now ask the banker why the bank is charging interest on your loan. The banker
explains that borrowing money is not free because money can be used by the bank in
other forms of investment to generate income. Therefore, the interest rate is being
charged as a cost of borrowing to compensate the opportunity costs of the bank with
regard to the cash loaned to you. Moreover, the interest rate is usually expressed as
an annual percentage rate.
Pre-activity
Directions: Write your answers on a (Bond paper or Yellow Pad) using black ballpen
only.
AJ Santos is a small business owner that wanted to purchase a new piece of
equipment to be used in operations. The new equipment would cost him Php.
150,000, an amount which would require him to obtain external financing from a
bank payable in five years. Upon applying for a loan, he notices that the bank is
charging an interest of 10%. He now wonders why the bank is charging interest.
ge
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