---## Loan Payment CalculationTeal and Associates needs to borrow **$35,000**. The best loan they can find is one at **12%** that must be repaid in monthly installments over the next **3 1/2 years**. How much are the monthly payments?### (a) State the type.- [ ] present value- [ ] future value- [ ] sinking fund- [ ] ordinary annuity- [ ] amortization### (b) Answer the question. (Round your answer to the nearest cent.)$[____]---In the question above, Teal and Associates are looking to determine their monthly loan payments for a $35,000 loan at an interest rate of 12% over a period of 3.5 years. The problem is broken into two parts: identifying the type of loan and calculating the monthly payment. The options provided for the type of loan help classify the loan for further financial calculations.To solve part (b), you will need to understand the concept of loan amortization and use the formula for monthly payments on an amortizing loan. **Explanation for formulating the monthly payments:**- **Principal (P)**: $35,000- **Annual interest rate (r)**: 12%- **Loan term in years (t)**: 3.5 years- **Number of payments per year (n)**: 12The formula to calculate the monthly payment (M) is given by:\[ M = P \frac{r(1+r)^n}{(1+r)^n-1} \]where:- $P$ is the loan amount (principal)- $r$ is the monthly interest rate (annual rate/12)- $n$ is the total number of payments (years * 12 for monthly payments)By substituting the specific values into this formula, one can calculate the exact monthly payment amount.

Monthly payment for the loan comprise of an interest part and principal repayment part and is…

Teal and Associates needs to borrow $35,000. The best loan they can find is one at 12% that must be repaid in monthly installments over the next 3- years. How much are the monthly payments? (a) State the type. present value O future value O sinking fund O ordinary annuity O amortization (b) Answer the question. (Round your answer to the nearest cent.)

Teal and Associates needs to borrow $35,000. The best loan they can find is one at 12% that must be repaid in monthly installments over the next 3- years. How much are the monthly payments? (a) State the type. present value O future value O sinking fund O ordinary annuity O amortization (b) Answer the question. (Round your answer to the nearest cent.)

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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A borrower can obtain an 80% loan with an 8% interest rate and monthly payments. The loan is to be fully amortized over 25 years. Alternatively, he could obtain a 90% loan at an 8.5% rate with the same loan term. The borrower plans to own the property for the entire loan term. solve with finanical calucltor What is the incremental cost of borrowing the additional funds? How would your answer change if 2 points were charged on the 90% loan? Would your answer to part (b) change if the borrower planned to own the property for only 5 years?
A borrower is purchasing a property for $180,000 and can choose between two possible loan alternatives. The first is a 90% loan for 25 years at 9% interest and 1 point and the second is a 95% loan for 25 years at 9.25% interest and 1 point. Assuming the loan will be held to maturity, what is the incremental cost of borrowing the extra money? O 12.01% O 14.34% 13.50% O 13.66%
You borrow $155,000; the annual loan payments are $12, 490.89 for 30 years. What interest rate are you being charged? Round your answer to the nearest whole number. How do i do this on a finance calculator (BA II Plus)
Teal and Associates needs to borrow $55,000. The best loan they can find is one at 13% that must be repaid in monthly installments over the next 5- years. How much are the monthly payments? (a) State the type. sinking fund future value ordinary annuity amortization present value (b) Answer the question. (Round your answer to the nearest cent.) $ %24
You are purchasing a home for $ 395,000. The loan requires a down payment of 15% of the purchase price. There are no other fees. The rest will be borrowed through a 7.35% (CIA ) amortized loan with annual payments for 20 years. What will the annual payment be on the loan?
The Nguyens are thinking of buying a home for $121,000. A potential lender advertises an 80%, thirty-year simple interest amortized loan at 8 and 1/4% interest, with an APR of 9.23%. Use the APR to approximate the fees included in the finance charge. (Round your answer to the nearest cent.)
A house price of $100,000 can be financed with two loans below with monthly payments. The total origination cost associated with these two loans is $2,000. Loan Amount Term (years) Interest Rate 1st loan $ 80,000 30 5% 2nd loan $ 10,000 30 7% Alternatively, the borrower can borrow one loan in the amount of $90,000 with origination cost of $1,500. What should the interest rate be on the $90,000, 30 years loan with monthly payments so that the borrower will be indifferent between these two alternatives? 4.28% 5.28% 6.28% 7.28%
Suppose you want to borrow $90,000 and you find a bank offering a 20-year loan with an APR of 5%. a. Find your regular payments if you pay n = 1, 12, 26, 52 times a year. b. Compute the total payout for each of the loans in part (a). c. Compare the total payouts computed in part (b). a. The payment for n = 1 would be $ The payment for n = 12 would be $ The payment for n = 26 would be $ The payment for n= 52 would be $ (Do not round until the final answer. Then round to the nearest cent as needed.)
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 %
Suppose Lydia needs to borrow $24,200 for the purchase of a car and is considering two loan options. Loan A is a seven-year loan at 8.8% interest while loan B is a six-year loan at 8.3% interest.Determine the monthly payment required to repay Loan A and the total interest paid over the life of Loan A. Round solutions to the nearest cent, if necessary.The monthly payment for Loan A is $ Incorrect.The total interest paid for Loan A is $ Incorrect.Determine the monthly payment required to repay Loan B and the total interest paid over the life of Loan B. Round solutions to the nearest cent, if necessary.The monthly payment for Loan B is $ Incorrect.The total interest paid for Loan B is $ Incorrect.Determine the lower-cost option of the two loans. Loan A is the lower-cost option. Loan B is the lower cost option. Determine the amount of savings Lydia will experience if she chooses the lower-cost loan option.Savings = $
Teal and Associates needs to borrow $65,000. The best loan they can find is one at 12% that must be repaid in monthly installments over the next 5 1/2 1 2 years. How much are the monthly payments? (a) State the type. A. ordinary annuityB.sinking fund C.present valueD.amortizationE.future value (b) Answer the question. (Round your answer to the nearest cent.)
You have just purchased a new warehouse. To finance the purchase, you've arranged for a 25-year mortgage loan for 75 percent of the $3,000,000 purchase price. The monthly payment on this loan will be $17,100. a. What is the APR on this loan? (Do not round intermediate calculations and enter your answer as a percent rounded to 2 decimal places, e.g., 32.16.) b. What is the EAR on this loan? (Do not round intermediate calculations and enter your answer as a percent rounded to 2 decimal places, e.g., 32.16.)

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