Red Lizard Construction just borrowed $57,000.00. Theterms of the loan require the company to make equalmonthly payments forever. The first monthly payment isdue in 1 month. If the regular monthly loan payment is S550.00, then what is the EAR of the loan? A rate less than9.62% or a rate greater than 12.53% A rate equal to orgreater than 9.62% but less than 10.91% A rate equal toor greater than 11.90% but less than 12.53% A rate equalto or greater than 11.40% but less than 11.90% A rateequal to or greater than 10.91% but less than 11.40%

A loan refers to a contract where money is forwarded by one party to another on the promise of…

Answered: Red Lizard Construction just borrowed…

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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Similar questions

A payday loan is structured to obscure the true interest rate you are paying. For example, in Washington, you pay a $30 "fee" for a two-week $200 payday loan (when you repay the loan, you pay $230). What is the effective annual interest rate for this loan? (Assume 26 bi-weekly periods per year.) The effective annual interest rate is%. (Round to two decimal places.)
A floating rate mortgage loan is made for $185,000 for a 30-year period at an initial rate of 12 percent interest. However, the borrower and lender have negotiated a monthly payment of $1,480. Required: a. What will be the loan balance at the end of year 1? b. If the interest rate increases to 13 percent at the end of year 2, how much is the payment plus negative amortization in year 2 and year 5 if the payment remains at $1,480?
Bank JPX is offering personal loans of $35,000 to be repaid over 6 years with payments of $625 per month. The first loan payment occurs one month after borrowing the $35,000. What effective annual rate (EAR) are they charging on this loan?
Red Lizard Construction just borrowed $53,600.00. The terms of the loan require the company to make equal monthly payments forever. The first monthly payment is due in 1 month. If the regular monthly loan payment is $600.00, then what is the EAR of the loan? A rate less than 10.44% or a rate greater than 14.72% A rate equal to or greater than 12.43% but less than 13.86% A rate equal to or greater than 10.44% but less than 11.06% A rate equal to or greater than 11.06% but less than 12.43% A rate equal to or greater than 13.86% but less than 14.72% 100
Suppose you take a 3/1 interest-only ARM for $100,000, monthly payments, 30-year term. The initial contract rate is 4.00% and the contract rate for year 4 is 6.50%. What is the balance of the loan at the end of year 4? 94,892.15 98,591.88 96,483.13 95,347.22
A loan of $1420 taken out on June 7 requires three payments. The first payment is due on July 7. The second payment is twice as large as the first payment and is due on August 19. The final payment, due on November 2, is three times as large as the first payment. If the focal date is June 7, what is the size of each of the three payments at an interest rate of 4.9%? The first payment is $ the second payment is $, and the third payment is $ (Round the final answers to the nearest cent as needed. Round all intermediate values to sx decimal places as needed)
4. You borrow $720,000 at 4.00% per year compounded monthly and you plan to pay off this loan in equal annual payments starting one year after the loan is made over a period of fifteen (15) years. What are the annual end-of-year payments? Determine the amount of interest and principal that are paid each year. What is the total interest paid for the loan? a. b. Restructure the loan in the previous question to make payments monthly. Determine the savings in interest overall. C. Restructure your payment schedule once more to make payment every two weeks. Determine the savings in interest (if any) in this case (compare to both previous repayment options). 1 OF 1
An industrial bank will loan you $10,500 for two years to buy miscellaneous equipment for your firm. The loan must be repaid in equal monthly payments. The annual interest rate on the loan is 11.5% of the unpaid balance. How much will the monthly payments be? Numeric Response
A company borrows $100,000 with interest at j₁2 = 9%. The loan is to be amortized by monthly payments of $1550 for as long as necessary. A final smaller payment will be calculated so the loan will be exactly repaid. The outstanding balance immediately after the th th 88 payment is $796.44. What is the value of the 89" and final payment? O A. $790.51 B. $796.44 C. $802.41 D. $808.43
A company borrows $174,900 from a bank. The interest rate on the loan is 6 percent compounded semiannualy. The company agrees to repay the loan in equal semiannualy installments over the next five years. The first payment is to be made six months from now. (Use factor table in Appendix B for calculation) Required 1: What is the amount of each semiannual payment? $ Required 2: In the first payment, what is the amount of interest cancelled? $ Required 3: In the fifth payment, what is the amount of loan paid net of interest? $ Required 4: In the last payment, what is the amount of interest cancelled? $ Required 5: Assume the debt contract has the option to make one extraordinary payment of up to 20% of the principal. If the company decides to exercise the right and make the extra payment together with the 8th payment, how much it must pay in dollars at the 9th payment to pay off the loan? $
Your bank offers to lend you $120,000 at an 6.5% annual interest rate to start your new business. The terms require you to amortize the loan with 10 equal end-of- year payments. How much interest would you be paying in Year 2? $16,692.56 O $19,068.53 O $10,428.81 O $18,161.67 O $17,254.82
A floating rate mortgage loan is made for $190,000 for a 30-year period at an initial rate of 12 percent interest. However, the borrower and lender have negotiated a monthly payment of $1,520. Required: a. What will be the loan balance at the end of year 1? b. If the interest rate increases to 13 percent at the end of year 2, how much is the payment plus negative amortization in year 2 and year 5 if the payment remains at $1,520?

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