Howard owns a small electronics repair shop. He wants to borrow $10,000 now and repay it over the next 1 or 2 years. He believes that new diagnostic test equipment will allow him to work on a wider variety of electronic items and increase his annual revenue. Howard received 2-year repayment options   Amount to Pay, $ Per Year Year Bank A Bank B 1 5, 378.05 5, 000.00 2 5, 378.05 5, 775.00 Total Paid 10, 756.10 10, 775.00 During a family conversation, Howard’s brother-in-law offered to lend him the $10,000 now and take $10,600 after exactly 1 year. Now Howard has three options and wonders which one to take. Which one is economically the best

Q: Tom borrowed $80,000 at a rate of 6.5% from bank for his new house. This is a 30 year monthly paid…

A: Given, Tom borrowed = $80,000 Rate= 6.5% Time period= 30 year

Q: Tom borrowed 300,000 for his son Remy's law school tuition at the University of Missisippi. Tom…

A: We need to use Simple interest formula to calculate maturity value of loan. A =P(1+r*t) where A=…

Q: Rhett is about to begin college (4-year) and has received a 10-year $7,500 Federal Direct…

A: Annuity refers to series of annual payment which is paid or received at start or ending of specific…

Q: Justin wants to save $45,000 to buy a new car in 5 years without obtaining a loan. He knows he can…

A: The amount to be invested today can be calculated using the Present Value formula.

Q: aria secure a loan of $12,000 3 years ago from a bank for used toward her college expenses. The bank…

A: Equated monthly installments (EMI) is the equally divided installments of the loan outstanding…

Q: Bob wants to save $20,000 to buy a new car in 4 years without obtaining a loan. He knows he can…

A: The amount required to invest today can be calculated with the help of present value function.

Q: Dan buys a property for $280,000. He is offered a 25-year loan by the bank, at an interest rate of…

A: Loan amortization is the systematic process of gradually reducing the outstanding balance on a loan…

Q: r. What is the annual loan payment Dan must make?

A: The loan payment is an amount that a borrower pays the bank during the term of the loan. It includes…

Q: Inez wants to borrow $2100 to start a small business.  She has found a bank that offers a 7% add on…

A: Calculation of Monthly Payment:The monthly payment is $47.25.Excel Spreadsheet:

Q: 2. Annuities - Johan, a sophomore management student, receives a call from an insurance agent who…

A: Annuity is an arrangement of receiving or paying payments in which face value of each payment is…

Q: Joe secured a loan of $15,000 two years ago from a bank for use toward his college expenses. The…

A: Monthly payment The minimum value that is required to be paid each month by an individual for the…

Q: Christopher just borrowed $19,500.00 to buy a used minivan. The terms of the loan require him to…

A: Amount borrowed, pv $ 19,500.00Equal monthly payments, pmt $       340.10Period (years), nper6Extra…

Q: takes out a $6,000$6,000 personal loan to make home repairs. His interest rate is 12%12% on a…

A: Interest is amount paid to the borrower above the amount of loan being taken and that depends on…

Q: Two years ago, Paul borrowed $10000 from his sister Gerri to start a business. Paul agreed to pay…

A: Borrowed amount = $10,000Interest rate for first 2 years = 4%Interest rate for next 5 years = 3%To…

Q: Jamal is building his first residence and has saved $15,000 that will be used as his down payment.…

A: Total Cost of House and Land = 150,000 Current Savings = 15,000 Cost of Mortgage Indemnity Insurance…

Q: Dr. & Mr. Baker were delighted to find a house for sale that they loved which required them to…

A: Loan amount=$140000Interest rate=9.6%Period =20  and 30 yearsMonthly rate=r=9.6/12=0.8%

Q: Mark deposits $900 at the end of each month in a savings account earning 4.5% quarterly. How soon…

A: Future value refers to the future value of the cash flows that are compounded over a given period of…

Q: Payments of Ordinary Annuities Ryan wants to get together $40 000 to purchase the first house in his…

A: Solution:- When an equal amount is deposited each period at end of period, it is called ordinary…

Q: Carol Garcia is seeking financing for her new business venture, the development of a local ski hill.…

A: Interest is a amount which is paid by a borrower to the person from the money has been taken by him…

Q: (a) Heather borrowed $5000 from her grandmother as a down payment on her first car. She promised to…

A: As per Bartleby honor code, when multiple questions are asked, the exe=pert is required only to…

Q: John is planning to take a loan for a major renovation project for his home. He can afford only 10%…

A: Annual salary of John = $80,000Annual interest rate = 8%Period = 5 years

Q: A retired couple buys a new recreational vehicle (RV) for $42,000.00. They make a down payment of…

A: Future Value The value of an asset at a future date is its future value. The present value is…

Q: Mark just took out a loan from the bank for $3,700.00. He plans to repay this loan by making a…

A: Loan installment is that which is paid by borrower to lender for a specified period of time. This…

Q: Emma plans to loan $1,000 to her friend, who will pay a simple interest rate of 5.8% every year for…

A: The objective of the question is to calculate the amount of money Emma's friend will owe her after…

Q: A mother earned $18750.00 from royalties on her cookbook. She set aside 20% of this for a down…

A: The interest earned from all the categories of investment that a single investor has made is known…

Cost of Credit

The cost of credit is an extra amount that the borrower has to pay besides the loan amount. These credit charges may vary from loan to loan. The cost of credit includes interest charges, maintenance charges, and arrangement charges. Some of the costs are mandatorily collected by the lender based on the loan amount and tenure of the loan. The cost of credit is also called finance charges of the credit.