Robin has taken out a loan for $485,000 from Mammon Financial, Inc. that provides pay off the student loan debt and purchase the apartment. The loan has an annual 12.59%, with annual end of year payments required. Robin can choose the size of th to the requirement that a minimum payment of at least $62,854 be made at the en Robin is comfortable with these loan terms because there is an option to fully pay o at any time, and Robin is counting on being a beneficiary of the estate of an extrem uncle, thrice removed, who, according to actuarial tables, has approximately 9 mon
Robin has taken out a loan for $485,000 from Mammon Financial, Inc. that provides pay off the student loan debt and purchase the apartment. The loan has an annual 12.59%, with annual end of year payments required. Robin can choose the size of th to the requirement that a minimum payment of at least $62,854 be made at the en Robin is comfortable with these loan terms because there is an option to fully pay o at any time, and Robin is counting on being a beneficiary of the estate of an extrem uncle, thrice removed, who, according to actuarial tables, has approximately 9 mon
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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Transcribed Image Text:10. Robin has just graduated with a master's degree in introspective journalism from a prestigious
university and $185,000 of student loan debt. Robin has found a job as a wine and cheese blogger in
New York that pays $34,000 per year, and wants to purchase a 250 square foot apartment in Manhattan
for $300,000.
Robin has taken out a loan for $485,000 from Mammon Financial, Inc. that provides the funds needed to
pay off the student loan debt and purchase the apartment. The loan has an annual interest rate of
12.59%, with annual end of year payments required. Robin can choose the size of the payment, subject
to the requirement that a minimum payment of at least $62,854 be made at the end of each year.
Robin is comfortable with these loan terms because there is an option to fully pay off the loan balance
at any time, and Robin is counting on being a beneficiary of the estate of an extremely wealthy great
uncle, thrice removed, who, according to actuarial tables, has approximately 9 months to live.
If Robin does not receive any money from the great uncle's estate, how long will it take Robin to pay off
the loan by making the minimum payment each year?
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