Problem 2:Sarah borrowed $120,000 at an interest rate of 9%. Repayment of the loan will beon six years in installments according to the following table:End of year1234. (F/P, 9%, 6) = 1.6771. (F/A, 9%, 6) = 7.523356Cash flow (for theinstallments only)$20,000$20,000$10,000$20,000$20,000$XDraw a chash flow diagram and find the size of the last payment (X) to pay off theloan.You may need the following to solve the problem:. (F/P, 9%, 3) = 1.295

Here,Loan Amount is $120,000Payment Cash Flows are as follows:…

Sarah borrowed $120,000 at an interest rate of 9%. Repayment of the loan will be on six years in installments according to the following table: End of year 1 2 3 4 5 6 Cash flow (for the installments only) $20,000 $20,000 $10,000 $20,000 $20,000 $X Draw a chash flow diagram and find the size of the last payment (X) to pay off the loan.

Sarah borrowed $120,000 at an interest rate of 9%. Repayment of the loan will be on six years in installments according to the following table: End of year 1 2 3 4 5 6 Cash flow (for the installments only) $20,000 $20,000 $10,000 $20,000 $20,000 $X Draw a chash flow diagram and find the size of the last payment (X) to pay off the loan.

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

See similar textbooks

Related questions

Q: You have a new 10 year Student loan for $20,000.00 that charges an interest rate of 6.45% compounded…

A: Amortization: It is the systematic writing-off of premium or discount on bonds issued. If the market…

Q: We will use Excel PMT function to calculate the payment Rand then create an amortization schedule…

A: PMT function in excel is used to calculate the amount of payment received or paid by the individual.…

Q: To repay a loan of $20,000, a series of nineteen level payments is to be made with the first payment…

A: Generally loans are paid by annual payments that carry the payment for loan and payment for interest…

Q: Prepare an amortization schedule for a three-year loan of $111,000. The interest rate is 10 percent…

A: The problem case wants to create the loan amortization schedule for the loan that is to be repaid in…

Q: A bank loan requires you to pay $88,000 at the end of each of the next eight years. The interest…

A: The objective of the question is to calculate the present value of the loan payments and to complete…

Q: A loan of $2,000 is paid by the following series of payments, beginning one year after the loan is…

A: Amortization table shows the break up of instalments for the interest charged on the outstanding…

Q: For a student loan of $20,700 at 2.75% for 20 years, complete the following. (a) Calculate the…

A: Loan amount = $20,700Interest rate = 2.75%Number of years = 20 years

Q: A bank makes a loan of $10,000. The loan will be paid back after 10 years with yearly payments of…

A: When the borrower borrows a loan from the lender, he has to pay a rate of interest on the borrowed…

Q: Emily has borrowed $1 000 000 from MQ Bank for 10 years at an interest rate of j2 = 4.1% p.a. She…

A: The objective of this question is to find the value of Emily's annual payment amount, X, for the…

Q: A student loan for $32,000 is paid back in monthly payments over ten years with an interest rate of…

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

Q: Consider a student loan of $25,000 at a fixed AP a. Calculate the monthly payment. b. Determine the…

A: Loan amount = $25,000Interest rate = 9%Number of years = 30 years

Q: Find the monthly house payments necessary to amortize a 7.2% loan of $222,000 over 15 years. The…

A: An example of debt is a loan. Borrowers agree to repay the lender with interest over a predetermined…

Q: a. Find the balance owed after 5 years b. Determine the cost of the loan (interest). c. If an extra…

A: The given problem can be solved using PMT function in excel. PMT function computes installment…

Q: Consider a student loan of $25,000 at a fixed APR of 12% for 20 years. a. Calculate the monthly…

A: We need to use loan amortisation formula below to calculate monthly payment. PMT =P*i1-1(1+i)n…

Q: A house costs $147,000. It is to be paid off in exactly ten years, with monthly payments of…

A: Given information: Cost of house is $147,000 Monthly payment is $1,783.52 Number of years is 10

Q: rrowed $1 000 000 from MQ Bank for 10 years at an interest rate of j2=3.11% p.a. She will make 10…

A: Loan Amount$ 1000,000Interest rate3.11%Annual Installment10Loans are paid by equal annual payments…

Q: Taking out a 21 year loan at $59,000 with 6% APR compounded monthly, and with monthly payments,…

A: Therefore, second principal payment is $117.9.

Q: You have taken out a 20-year loan of $72,000 with 3% interest (APR) compounded monthly and with…

A: Annual percentage rate (APR) is a rate that a person is paying annually after undertaking all the…

Q: Miller borrows $370,000 to be paid off in four years. The loan payments are semiannual with the…

A: Principal loan amount (P) = $370,000Semiannual interest rate (r) = 0.04 (i.e. 0.08 / 2)Semiannual…

Q: A $3,000,000 apartment complex loan is to be paid off in 10 years by making 10 equal annual…

A: Solution:- When a loan is taken, the borrower has to repay the debt either in equal installments or…

Q: Create an amoritization schedule for a $1,000,000 loan that requires equal annual payments in each…

A: An amortization schedule is a table or chart that outlines the specific details of a loan over time.…

Q: Christy takes out a four year loan from Bank A for $100,000 with annual repayments at the end of…

A: The amortization schedule refers to the breakdown of periodic payments to find out how much amount…

Q: Suppose you borrow $14,000. The interest rate is 11%, and it requires 4 equal end-of-year payments.…

A: Annual Payment = P * r * [(1+ r)n/({1 + r}n -1)]Where, P = Principal borrowed = $14,000r =…

Question

Problem 2:
Sarah borrowed $120,000 at an interest rate of 9%. Repayment of the loan will be
on six years in installments according to the following table:
End of year
1
2
34
. (F/P, 9%, 6) = 1.6771
. (F/A, 9%, 6) = 7.5233
5
6
Cash flow (for the
installments only)
$20,000
$20,000
$10,000
$20,000
$20,000
$X
Draw a chash flow diagram and find the size of the last payment (X) to pay off the
loan.
You may need the following to solve the problem:
. (F/P, 9%, 3) = 1.295

Expert Solution

This question has been solved!

Explore an expertly crafted, step-by-step solution for a thorough understanding of key concepts.

This is a popular solution!

SEE SOLUTION Check out a sample Q&A here

Step 1: Given:

VIEW

Step 2: Calculate the size of the last payment:

VIEW

Step 3: Cash Flow Diagram:

VIEW

Solution

VIEW

Trending now

This is a popular solution!

Step by step

Solved in 4 steps with 1 images

SEE SOLUTION Check out a sample Q&A here

Knowledge Booster

Learn more about

Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, finance and related others by exploring similar questions and additional content below.

Similar questions

1) A 20-year loan of $1,100 at an effective annual interest rate of 7% is repaid with payments at the end of each year. Each of the first ten payments equals 150% of the amount of interest due. Immediately after the tenth payment, you take out a 10 year loan with payments $100 at the end of each year and effective annual interest rate of i and use this loan to pay off your original loan. Find i.
Anna borrows 188000 from a bank for a term of 21 years. The loan is to be repaid by level annual repayments, paid in arrears, and the interest rate is 5% per annum effective. Calculate the capital outstanding immediately after the 6th payment. Give your answer to two decimal places.
A loan in the amount of 300,000 is repaid with 20 end of year payments containing equal principal. The annual effective interest rate isi, and the total interest paid during the life of the loan is 250,000 . Just after the 10 th payment is made, the loan is renegotiated. There will now be 10 end of year payments ofXwith the annual effective interest rate remaining ati. Find the outstanding loan balance just after the 11th payment.
You borrow $145,000 and must make annual loan payments of $11,635.18 for 20 years, starting at the end of the year. What interest rate are you being charged? a. 5% b. 7% c. 8% d. 9% e. 6%
Asma has borrowed $1,000,000 from MQ Bank for 10 years at an interest rate of j2=4.67% p.a. She will make 10 annual repayments. According to the loan agreement, Asma's repayments will be $83,000 for the first two years followed by payments of X per year for the remaining eight years. This loan needs to be fully repaid by the end of 10 years. (b) Assume that all annual repayments will be paid at the beginning of each year (the first payment will be at the start of the first year), what is the value of Asma's annual payment amount, X (rounded to four decimal places)? Question 7Answer a. 134233.5495 b. 128177.7626 c. 127887.4496 d. 133859.7935
please help
Liza Ammorante borrow 125,000 per annum to be paid in 5 years time, on equal yearly at 6.735% per annum to be paid in 5 years time, on equal yearly amortization. Make a matrix - Schedule of Liza's loan where she is going to a fixed amount in which the the interest charges are to be paid in diminishing balance the principal payment every year is an on increasing amount
Find the monthly payment and estimate the remaining balance (to the nearest dollar). Assume interest is on the unpaid balance. 10) 30-year car loan for $235,000 at 3.21%; remaining balance after 20 years.
Pls help correct thanks . Prepare an amortization schedule for a three-year loan of $102,000. The interest rate is 11 percent per year, and the loan agreement calls for a principal reduction of $34,000 every year. How much total interest is paid over the life of the loan?.

Recommended textbooks for you

Essentials Of Investments

Finance

ISBN:

9781260013924

Author:

Bodie, Zvi, Kane, Alex, MARCUS, Alan J.

Publisher:

Mcgraw-hill Education,

FUNDAMENTALS OF CORPORATE FINANCE

Finance

ISBN:

9781260013962

Author:

BREALEY

Publisher:

RENT MCG

Financial Management: Theory & Practice

Finance

ISBN:

9781337909730

Author:

Brigham

Publisher:

Cengage

Foundations Of Finance

Finance

ISBN:

9780134897264

Author:

KEOWN, Arthur J., Martin, John D., PETTY, J. William

Publisher:

Pearson,

Fundamentals of Financial Management (MindTap Cou…

Finance

ISBN:

9781337395250

Author:

Eugene F. Brigham, Joel F. Houston

Publisher:

Cengage Learning

Corporate Finance (The Mcgraw-hill/Irwin Series i…

Finance

ISBN:

9780077861759

Author:

Stephen A. Ross Franco Modigliani Professor of Financial Economics Professor, Randolph W Westerfield Robert R. Dockson Deans Chair in Bus. Admin., Jeffrey Jaffe, Bradford D Jordan Professor

Publisher:

McGraw-Hill Education

Essentials Of Investments

Finance

ISBN:

9781260013924

Author:

Bodie, Zvi, Kane, Alex, MARCUS, Alan J.

Publisher:

Mcgraw-hill Education,

FUNDAMENTALS OF CORPORATE FINANCE

Finance

ISBN:

9781260013962

Author:

BREALEY

Publisher:

RENT MCG

Financial Management: Theory & Practice

Finance

ISBN:

9781337909730

Author:

Brigham

Publisher:

Cengage

Foundations Of Finance

Finance

ISBN:

9780134897264

Author:

KEOWN, Arthur J., Martin, John D., PETTY, J. William

Publisher:

Pearson,

Fundamentals of Financial Management (MindTap Cou…

Finance

ISBN:

9781337395250

Author:

Eugene F. Brigham, Joel F. Houston

Publisher:

Cengage Learning

Corporate Finance (The Mcgraw-hill/Irwin Series i…

Finance

ISBN:

9780077861759

Author:

Stephen A. Ross Franco Modigliani Professor of Financial Economics Professor, Randolph W Westerfield Robert R. Dockson Deans Chair in Bus. Admin., Jeffrey Jaffe, Bradford D Jordan Professor

Publisher:

McGraw-Hill Education

SEE MORE TEXTBOOKS