Suppose that you have a $20,000 unsubsidized student loan that is currently deferred. You plan to complete the final 1.5 years of undergrad (assume 18 months until graduation) and then complete a 2 year master's program. The loan's interest rate is 7%. While the loan is deferred, you are not required to make any payments, but it is still accruing interest. So, you consider making interest-only payments until you finish your master's program. Prepare amortization tables for both scenarios. How much do you save when making these voluntary payments?

Suppose that you have a $20,000 unsubsidized student loan that is currently deferred. You plan to complete the final 1.5 years of undergrad (assume 18 months until graduation) and then complete a 2 year master's program. The loan's interest rate is 7%. While the loan is deferred, you are not required to make any payments, but it is still accruing interest. So, you consider making interest-only payments until you finish your master's program. Prepare amortization tables for both scenarios. How much do you save when making these voluntary payments?

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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Here is the deal: You can pay your college tuition at the beginning of the academic year or the same amount at the end of the academic year. You either already have the money in an interestbearing account or will have to borrow it. Deal, or no deal? Explain your financial reasoning. Relate your answer to the time-value of money, present value, and future value
You are interested in purchasing a house but unfortunately you don't have any money for a down payment. Luckily the house you are looking at buying is only $325, 000 and the bank currently has an offer where they will lock in your interest rate for the entire length of the mortgage. The rate that they are offering is 4.5% interest over 15 years. Develop a worksheet that will show the monthly payment, the beginning and ending balance for each year of the loan, the annual cost of the loan, and the annual interest paid for each year of the loan. Please show Formulas
To help pay for college, you have just taken out a$1,000 government loan that makes you pay $126per year for 25 years. However, you don’t have to startmaking these payments until you graduate from collegetwo years from now. Why is the yield to maturitynecessarily less than 12%? (This is the yield to maturityon a normal $1,000 fixed-payment loan on which youpay $126 per year for 25 years.)
Suppose your firm is seeking a four year, amortizing $260,000 loan with annual payments and your bank is offering you the choice between a $268,000 loan with a $8,000 compensating balance and a $260,000 loan without a compensating balance. The interest rate on the $260,000 loan is 9.8 percent. How low would the interest rate on the loan with the compensating balance have to be for you to choose it? (Do not round intermediate calculations and round your final answer to 2 decimal places.) Interest rate %
Stafford loans are the most popular form of student loan in the United States. The current interest rate on a Stafford loan is 4.34% per year. If you borrow $29,000 to help pay for your college education at the beginning of your freshman year, how much will you have to pay at the end of your freshman, sophomore, junior, and senior years for this loan? This is a total of four years over which the original loan will be repaid. The annual loan payment will be ______
You have a loan outstanding. It requires making four annual payments of $1000 each at the end of the next four years. Your bank has offered to allow you to skip making the next three payments in lieu of making one large payment at the end of loan's term in four years. If the interest rate on the loan is 7%, what final payment will the bank require you to make so that it is indifferent to the two forms of payment? Round answer to nearest dollar
Suppose your firm is seeking a three-year, amortizing $400,000 loan with annual payments, and your bank is offering you the choice between a loan of $415,000 with a compensating balance of $15,000 and a loan of $400,000 without a compensating balance. The interest rate on the $400,000 loan is 9.5 percent. How low would the interest rate on the loan with the compensating balance have to be for you to choose it? (Do not round intermediate calculations. Round your final answer to 2 decimal places.) Interest rate 8.73 %
It does not have to be a long explanation.
You have just completed your four-year degree at Southwest Minnesota State University (SMSU)! Your student loans that you have accumulated while studying at SMSU total $25,000. Since you have graduated, you must now begin repaying these student loans. The loan’s annual interest rate is six percent (6%) and it requires four equal end-of-year payments. a) Set up an amortization schedule that shows the annual payments, interest payments, principal repayments, and beginning and ending loan balances. B) What is the total amount that you will repay over this four-year period (principal + interest)? c) What portion or percentage are the total “Interest Payments” of the initial loan value of $25,000?
Suppose that you need $30,000 for your last year of college. You could go to a private lending institution and apply for a signature student loan; rates range from 7% to 14%. However, your Aunt Sally is willing to loan you the money from her retirement savings, with no repayment until after graduation. All she asks is that in the meantime you pay her each month the amount of interest that she would otherwise get on her savings (since she needs that to live on), which is 4%.What is your monthly payment to her, and how much interest will you pay her over the year (9 months)?(Fill in the blanks below and give your answers as whole numbers.)The amount of interest per month you would pay Aunt Sally is $__(1)__ .The total interest you will pay her over the year (9 months)is $__(2)__ .
Please don't provide handwritten solution ....
I’m order to start a small business, a student takes out a simple interest loan for 8000 for 3 months at a rate of 9.00%. How much interest must the student pay? Find the future value of the loan

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