Similarly to the Gilbert Lumber Company case, suppose today is January 1, 2020 and your company, Maschera Corp. has a loan with an APR of 18% whose principal is reduced by $4,000 on the last day of every month. The balance outstanding on this loan on December 31, 2019 (i.e., yesterday) was $389,000. Find the TOTAL amount of interest that Maschera will pay over the next calendar year; that is, over the next 12 months. (Acceptable error = $200) Carefully note that, as stated, the principal payments on the loan occur on the last day of each month. Thus, for example, during the entire month of January, the balance outstanding of the loan is equal to the balance that loan had on December 31.

Similarly to the Gilbert Lumber Company case, suppose today is January 1, 2020 and your company, Maschera Corp. has a loan with an APR of 18% whose principal is reduced by $4,000 on the last day of every month. The balance outstanding on this loan on December 31, 2019 (i.e., yesterday) was $389,000. Find the TOTAL amount of interest that Maschera will pay over the next calendar year; that is, over the next 12 months. (Acceptable error = $200) Carefully note that, as stated, the principal payments on the loan occur on the last day of each month. Thus, for example, during the entire month of January, the balance outstanding of the loan is equal to the balance that loan had on December 31.

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

Similar questions

The Schitt Company borrowed $900 on January 1, 2020 at an annual rate of interest of eight percent. The loan has a three-year term and the company will not make any payments until the end of the term. What amount of interest expense will the company record on December 31, 2022? Round your final answer to the nearest whole dollar and enter as a positive number.
On May 3, 2020, Leven Corporation negotiated a short-term loan of $645,000. The loan is due October 1, 2020, and carries a 5.30% interest rate. Use ordinary interest to calculate the interest. What is the total amount Leven would pay on the maturity date? (Use Days in a year table.) Note: Do not round intermediate calculations. Round your answer to the nearest cent. Maturity value
Assume you have secured a loan of $10,000 from a bank which will be paid in one year. The fin bank has offered you $850 monthly installments, which equates to a 3.67% annualized interest rate. The monthly interest rate of 0.31% is the annual rate divided by 12. You know that the interest is paid at the end of the period, so you can multiply the opening balance by the monthly interest rate to get the interest paid. What is the closing balance for the month of November? Month Payment Interest Principal Opening Balance Closing Balance January $850.00 $10,000.00 February $850.00 March $850.00 April $850.00 May $850.00 June $850.00 July $850.00 August $850.00 September $850.00 October $850.00 November $850.00 December $850.00 Monthly Rate 0.31% Annual Rate 3.67% Total Interest Paid Group of answer choices a. $847.31…
Suppose you take on a loan that is subject to an annual interest rate of 12%, with the interest rate being calculated at the end of each month. Two years later you pay back the loan in full by making a payment of $1,020. What was the original amount of the loan?
On May 3, 2020, Leven Corporation negotiated a short-term loan of $870,000. The loan is due October 1, 2020, and carries a 6.80% interest rate. Use ordinary interest to calculate the interest. What is the total amount Leven would pay on the maturity date? (Use Days in a year table.) Note: Do not round intermediate calculations. Round your answer to the nearest cent. Maturity value:
On January 1, 2022, Anderson Company purchased a machine with a cost of $14,409.50. To complete the purchase, Anderson signs a note specifying monthly payments of $600 beginning one month from the purchase date. The interest rate is 18% compounded monthly. How many payments will Anderson make for this loan? What is the total amount of interest that Anderson will pay over the life of this loan?
Assume you have secured a loan of $10,000 from a bank which will be paid in one year. The bank has offered you $850 monthly installments, which equates to a 3.67% annualized interest rate. The monthly interest rate of 0.31% is the annual rate divided by 12. You know that the interest is paid at the end of the period, so you can multiply the opening balance by the monthly interest rate to get the interest paid. What is the interest rate to be paid for the month of October? Month Payment Interest Principal Opening Balance Closing Balance January $850.00 $10,000.00 February $850.00 March $850.00 April $850.00 May $850.00 June $850.00 July $850.00 August $850.00 September $850.00 October $850.00 November $850.00 December $850.00 Monthly Rate 0.31% Annual Rate 3.67% Total Interest Paid Group of answer choices a. 2.25…
We assume that we have a secured a loan of $10,000 from a bank which will be paid in one year. The bank has offered you $850 monthly installments, which equates to a 3.67% annualized interest rate. The monthly interest rate of 0.31% is the annual rate divided by 12. You know that the interest is paid at the end of the period, so you can multiply the opening balance by the monthly interest rate to get the interest paid. What is the interest rate to be paid for the month of October? Month Payment Interest Principal Opening Balance Closing Balance January $850.00 $10,000.00 February $850.00 March $850.00 April $850.00 May $850.00 June $850.00 July $850.00 August $850.00 September $850.00 October $850.00 November $850.00 December $850.00 Monthly Rate 0.31% Annual Rate 3.67% Total Interest Paid Group of answer choices…
The Electric Car Corporation borrowed $3,000,000 from the Bank of Walnut Creek on October 1, 2021. The loan was from an SBA (Small Business Administration) program that required interest only payments annually at the low rate of 1.75%. At the end of 5 years, on October 1, 2026 the entire loan of $3,000,000 must be repaid. In the event it is not repaid, the interest rate of 1.75% will be increased retroactively at a rate of 7.5%. In order to assure that the loan can be repaid on October 1, 2026, the Chief Financial Officer wants to set up a special fund to contribute to each and every year in order to have sufficient funds to repay the loan in full on October 1, 2026. The Investment firm of J. Edward and Associates of Emeryville, California has an investment fund available that has an annual fixed return of 5%. The Electric Car Corporation wants to start making an annual deposit to the fund beginning in one year starting on October 1, 2022, and for each of the next three years of…
You borrow $207,000 to be repaid in monthly installments over the next 25 years. The first payment occurs one month from today. If the annualized interest rate for the loan is3.4%, how much principal is amortized in payment #52? Enter your answer as a positive number, and round to the nearest dollar. Note:- Don't use Excel and chatgpt
On December 1, 2021, your company borrowed $48,000, a portion of which is to be repaid each year on November 30. Specifically, your company will make the following principal payments: 2022, $6,400; 2023, $9,600; 2024, $12,800; and 2025, $19,200. Show how this loan will be reported in the December 31, 2022 and 2021 balance sheets, assuming principal payments will be made when required. Balance Sheet (Partial) As of December 31 2022 2021 Total Liabilities
On May 3, 2020, Leven Corporation negotiated a short-term loan of $660,000. The loan is due October 1, 2020, and carries a 5.40% interest rate. Use ordinary interest to calculate the interest. What is the total amount Leven would pay on the maturity date? (Use Days in a year table.) Note: Do not round intermediate calculations. Round your answer to the nearest cent.

SEE MORE QUESTIONS

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