Payday loans are very short-term loans that charge very high interest rates. You can borrow $150 today and repay $210 in two weeks. What is the compounded annual rate implied by this 40 percent rate charged for only two weeks? (Hint: Compound the 2-week return 26 times for the annual return.) (Do not round intermediate calculations and round your final answer to the nearest whole percent.) Compounded annual rate %

Payday loans are very short-term loans that charge very high interest rates. You can borrow $150 today and repay $210 in two weeks. What is the compounded annual rate implied by this 40 percent rate charged for only two weeks? (Hint: Compound the 2-week return 26 times for the annual return.) (Do not round intermediate calculations and round your final answer to the nearest whole percent.) Compounded annual rate %

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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During the last three months interest rates have fallen, and you would like to take advantage of the lower rates that currently exist by refinancing. Refinancing means you pay off the outstanding principal balance on your current mortgage with a new loan at the lower rates that currently exist. If rates have fallen to 3.25%, how much would you save monthly if you refinance at the end of the second month? (assume you take out a new 20-year loan). Show your calculations.
Many mortgage lenders offer a way to lower your interest rate by paying some of the interest up front. This prepaid interest is known in the industry as points. Each point corresponds to 1% of the amount borrowed. In short, you're paying a fee to lower your interest rate. A lender offers you a 10-year fixed mortgage of $150,000 at 2.8% interest when you buy 1 point. Find the monthly payment. Do not round intermediate calculations. Round your answer to the nearest centavo. The monthly payment would be S x
You just borrowed $1,000,000 using a 30 year home loan that's interest-only for the first 4 years, and principal and interest (P&I) for the remaining 26 years. The interest rate is 5.76% pa compounding monthly which is not expected to change. Which of the following statements is NOT correct? Select one: a. The effective monthly rate is 0.048 per month, given as a decimal. If the interest rate falls, the IO and P&I monthly payments will fall. b. If the IO term was one year shorter so the P&I term was one year longer, then the monthly payments over the P&I term would be lower. c. The IO loan's perpetuity factor' is 208.333333, while the P&I loan's annuity factor is 161.568937. d. The IO loan payments will be $4,800 per month, rounded to the nearest cent. e. The P&I loan payments will be $6,189.31 per month, rounded to the nearest cent.
6. In your search for the best rate of on a new car loan, you note that various lenders quote rates with differing compounding frequencies. your car dealer offers financing at 5 % % compounded monthly. For you to be indifferent as to which lending rate to choose, what would the nominal rate be on a loan from another lender with interest compounded. a) quarterly? b) Semi-annually?
vi. Subject Finance
You have a choice between a 30-year fixed rate loan at 6.5% and an adjustable rate mortgage (ARM) with a first year rate of 4%. Neglecting compounding and changes in principal, estimate your monthly savings with the ARM during the first year on a $225,000 loan. Suppose that the ARM rate rises to 7% at the start of the third year. Approximately how much extra will you then be paying over what you would have paid if you had taken the fixed rate loan? What is the approximate monthly savings with the ARM during the first year? S (Round to the nearest dollar as needed.)
Explain well with proper step by step Answer.
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Decreasing the number of years of a loan decreases the amount of interest repaid over the term of the loan. Suppose a dental hygienist has the option of a 30-year loan or a 25-year loan of $395.000 at an annual interest rate of 4.75%. (a) Calculate the monthly payment (in dollars) for each loan. (Round your answers to the nearest cent.) 30-year loan $? 25-year loan $? (b) Calculate the savings in interest (in dollars) by using the 25-year loan. (Round your answer to the nearest cent.)
You've just taken out a student loan with a quoted interest rate of 4.1%. You will have to pay back $1,600 in 19 years, with no intermediate payments necessary. A. How much did you borrow if interest is compounded monthly? B. How much did you borrow if interest is compounded daily?
Decreasing the number of years of a loan decreases the amount of interest repaid over the term of the loan. Suppose a dental hygienist has the option of a 30-year loan or a 25-year loan of $365,000 at an annual interest rate of 3.75%. (a) Calculate the monthly payment (in dollars) for each loan. (Round your answers to the nearest cent.) 30-year loan $? 25-year loan $? (b) Calculate the savings in interest (in dollars) by using the 25-year loan. (Round your answer to the nearest cent.) $ ?
You just borrowed 5900,000 using a 25 year home loan that's interest-only for the first 2 years, and principal and interest (P) for the remaining 23 years. The interest rate is 3.72% pa compounding monthly which is not expected to change. Which of the following statements is NOT correct? Select one Oia. The effective monthly rate is 0.0031 per month, given as a decimal, if the interest rate rises, the 10 and P&d monthly payments will rise. Ob if the 10 term was one year shorter so the PS term was one year longer, then the monthly payments over the P& term would be higher O The 10 loan's perpetuity factor is 322.580645, while the Pad loan's annuity factor is 155293235 Od The 10 loan payments will be $2,790 per month, rounded to the nearest cent Qe The P& loan payments will be $4,857.17 per month, rounded to the nearest cent.

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