The company is planning to purchase a new office building and will need to borrow $750,000. The loan will be repaid over 20 years and the bank is charging an interest rate of 7% annually. What will the MONTHLY loan payments be? (Round to 2 decimals) 70794.69 5899.56 5814.74 4956.52

The company is planning to purchase a new office building and will need to borrow $750,000. The loan will be repaid over 20 years and the bank is charging an interest rate of 7% annually. What will the MONTHLY loan payments be? (Round to 2 decimals) 70794.69 5899.56 5814.74 4956.52

Intermediate Financial Management (MindTap Course List)

13th Edition

ISBN:9781337395083

Author:Eugene F. Brigham, Phillip R. Daves

Publisher:Eugene F. Brigham, Phillip R. Daves

Chapter22: Providing And Obtaining Credit

Section: Chapter Questions

Problem 2P: Cost of Bank Loan Mary Jones recently obtained an equipment loan from a local bank. The loan is for...

See similar textbooks

Related questions

Q: Your brother wants to borrow $10,750 from you. He has offered to pay you back $12,250 in a year. If…

A: Amount of borrowing = $10,750Amount returned after 1 year = $12,250Cost of capital = 11%To find: The…

Q: Exotic Fishing Expeditions has $1000 par value bonds currently quoted at 90 percent, with 15 years…

A: Yield to Maturity (YTM) refers to the total return you expect to receive on a bond if you hold it…

Q: Assume Gillette Corporation will pay an annual dividend of $0.68 one year from now. Analysts expect…

A: The objective of this question is to calculate the value of a share of Gillette stock using the…

Q: The discount rate is _ % per month. (Round to five decimal places.) The monthly mortgage payment is…

A: A mortgage payment is a regular commitment that a borrower makes to a lender in order to pay back a…

Q: Problem 6-7 Calculating Annuity Values [LO1] You plan to deposit $5,200 at the end of each of the…

A: Future value of annuity cash flow = A x [(1+i)^t - 1] / iwhereA = Periodic cash flow = annual cash…

Q: Click here to view the 3.5% compound interest table. Click here to view the 3.5% compound interest…

A: April 1= deposit=$2680Deposit on May 2=$200Deposit on May 25=$630Find out balance on June…

Q: At the end of 5 years from now, your friend wants to have $225, 000 saved for a down payment on a…

A: Amount required = $225,000Time period = 5 yearsExpected return = 5% compounded monthly

Q: If you purchase a $1000 par value bond for $1048 that has a 5 1/8% coupon rate and 16 years until…

A: AYTM is Annual Yield to maturity is the percentage of return that an investor expects from the…

Q: Suppose that S ¥180/S. The annualized risk - free rates are 4.6% and 2.75% in Japan and the U.S.,…

A: Forward rate is that rate of exchange which is determined on the basis of interest rate between two…

Q: Based on the following information you have collected, what is the sustainable growth rate (SGR) for…

A: Sustainable growth rate is the growth rate that a company can have or can sustain without having to…

Q: uy has nothing saved for college. He wants to pay $42,000.00 per year to the school for 4 years. The…

A: College fees=$42000Period=4 yearsInterest rate-8.46%

Q: As one of the loan officers for Grove Gate Bank, calculate the monthly principal and interest, PI…

A: A mortgage could be a budgetary instrument that empowers people to buy genuine bequest by borrowing…

Q: You plan to borrow $1,000 from a bank. In exchange for $1,000 today, you promise to pay $1,130 in…

A: The objective of the question is to understand the cash flow timeline from both the borrower's and…

Q: B. You work at an investment bank and are advising a firm that wishes to issue a 10 yea bond. You…

A: Price of bond is the present value of coupon payment plus present value of par value of the bond.

Q: Using a $400,000, 30-year monthly payment Priced Level-Adjustable Mortgage, assuming the "real" loan…

A: Unpaid mortgage refers to the remaining balance on a loan secured by real estate, typically a…

Q: Data on Shick Inc. for last year are shown below, along with the days sales outstanding of the firms…

A: Here,Sales is $103,000Accounts Receivables is $16,000Days Sales Outstanding is 56.699Benchmark DSO…

Q: You want to purchase IBM stock at $130 from your broker using as little of your own money as…

A: The objective of this question is to determine the number of shares of IBM stock that can be…

Q: How can a Finance, as a function within the company, influence the process of business strategy…

A: Finance in business refers to the management of funds and financial resources to achieve the…

Q: A new electronic process monitor costs $990,000. This cost could be depreciated at 30% per year…

A: Cost of monitor = $990,000Depreciation rate = 30%Salvage value = $100,000Savings before tax=…

Q: $6. The company also has two bond issues outstanding. The first bond issue has a face value of $70…

A: Book value of equity = No.of shares * Book value per share =…

Q: 3.65

A: Market Price of bond:-=…

Q: Arvo Corporation is trying to choose between three alternative investments. The three securities…

A: Given data:Pre-tax return for tax-free municipal bonds = 9.30%Pre-tax return for Wooli Corporation…

Q: The price of a European call option on a non dividend paying stock with a strike price of $79 is $8.…

A: Call and put option values must be at break-even in order to prevent arbitrage associated with…

Q: Suppose you deposit $380 today, $565 in one year, and $929 in two years in an account that pays an…

A: We need to calculate future value here:It has formula, FV = PV * (1+r)^nwhere, PV is present valuer…

Q: You find the following corporate bond quotes. To calculate the number of years until maturity,…

A: A bond's interest payment made in relation to its face value, or par, is known as the coupon rate.…

Q: Suppose the call money rate is 4.5 percent, and you pay a spread of 2.5 percent over that. You buy…

A: The call money rate serves as an indicator of the prevailing short-term interest rates in the…

Q: You are going to make the following contributions into a savings account: Year 1: $0 (1 year from…

A: Interest Rate = 7.23% p.a.Period = 6 yearsCashflows:Year 1 = 0Year 2 = $1,000 (compounded for 4…

Q: Elrond has made an investment that will generate returns that are based on the state of the economy.…

A: Portfolio variance:Portfolio variance is a statistical measure of how much the returns on different…

Q: During a normal month, Jank's receives a total of nine checks with a total value of $237,400. On…

A: Total value of the checks= $237,400Number of days = 1Number of Days in a Month = 30

Q: Suppose the same firm Amazon will distribute a $5 dividend next year. And you expect the dividend to…

A: A financial valuation technique called the Dividend Discount Model (DDM) is used to calculate a…

Q: Tresnan Brothers is expected to pay a $1.90 per share dividend at the end of the year (i.e.. D1 =…

A: Current price of stock is the price which can be paid for purchase of the stock. It is also called…

Q: Consider the following information on Stocks I and II: State of Economy Recession Normal Irrational…

A: Standard deviation represents the risk linked to a stock, while beta pertains to the systematic risk…

Q: Presented below is selected financial data for Teague Industries for the current year: Current…

A: Amounts (Current years)Amounts (Previous years)Total assets$19,723$17,020Total shareholder's…

Q: Assets, Incorporated, plans to issue $6 million of bonds with a coupon rate of 7.8 percent, a par…

A: Par value = $1000Years to maturity = 25 yearsCurrent interest rate = 7.1%Coupon rate = 7.8%In one…

Q: Find the amount of the final payment if it is to be larger than the regular payments.

A: Present value illustrates the current value of a sum of money that will be received or paid in the…

Q: An investor is considering purchasing 2 bonds, which are identical in terms of credit risk and…

A: Given,Bond A - Tax exempt municipal bondBond B- Taxable corporate bondTo determine and compare the…

Q: Winter in Boston, Inc. just paid a dividend of $2 per share. It expects to earn $6 per share next…

A: PVGO is an important financial concept or metric that is used in the domain of equity valuation.…

Q: An investor is bullish in XYZ stock. He decides to buy on margin 1,000 shares at market price of…

A: Initial price=$50Maintenance margin=30%Initial margin=60%What should be margin call price.

Q: The Chief Financial Officer of Eaton Medical Devices has determined that the firm’s capital…

A: This is a case of LP i.e. linear programming. LP entails an optimization of something subjected to…

Q: naloa Appliance, Incorporated, a private firm that manufactures home appliances, has hired yo ave…

A: FirmBetaDebtEquityiRobot1.03$0$3,690Middleby's1.98$789$7,690National Presto0.23$0$948Newell…

Q: Sheridan Industries, Inc. issued $17,400,000 of 8% debertures on May 1, 2024 and received cash…

A: The objective of the question is to calculate the total dollar amount of discount or premium…

Q: Explain FOUR (4) reasons that influence the changes which make debt security yields vary. Please…

A: Debt securities are comparatively less risky investments than equity. However, expected yield on…

Q: Martin Manufacturing stock has a market value of $45 a share. If the book value is $25 a share, the…

A: Market Value per share = $45Book Value per share = $25The market-to-book ratio is compares a…

Q: labeled "L") depicts the NPV for a project with larger cash flows later of -$1,000, $100, $300,…

A: “Since you have posted a question with multiple sub-parts, we will solve first three sub-parts for…

Q: A corporation issues a bond that promises to pay you monthly coupons in the amount of $ 77.5 per…

A: Bond price refers to the market value at which a bond is traded. It represents the present value of…

Q: A fully amortizing mortgage is made for $88,000 for 25 years. Total monthly payments will be $1,140…

A: Compound = Monthly = 12present Value = pv = $88,000Time = nper = 25 * 12 = 300Monthly Payment = pmt…

Q: What is the standard deviation of the returns on a $60,000 portfolio which consists of stocks S and…

A: Standard deviation can be found by finding the portfolio return and the portfolio variance where the…

Q: Congratulations, you just won the lottery! As the winner, you will receive payments of $2 million at…

A: The present value of an annuity due is the calculation used to determine the current value of a…

Q: A mutual fund has 500 shares of General Electric, currently trading at $16, and 500 shares of…

A: Net Asset Value (NAV) is a key financial metric used in the context of investment funds, including…

Q: Bar charts and risk Swan's Sportswear is considering bringing out a line of designer jeans.…

A: The objective of the question is to analyze the expected returns and riskiness of two potential…

Question

The company is planning to purchase a new office building and will need to
borrow $750,000. The loan will be repaid over 20 years and the bank is charging
an interest rate of 7% annually. What will the MONTHLY loan payments be?
(Round to 2 decimals)
70794.69
5899.56
5814.74
4956.52

Expert Solution

This question has been solved!

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

SEE SOLUTION Check out a sample Q&A here

Step 1: Information given in the question

VIEW

Step 2: Calculation of Monthly Payment using Formula

VIEW

Step 3: Calculation of Monthly Payment using Excel

VIEW

Solution

VIEW

Step by step

Solved in 4 steps with 2 images

SEE SOLUTION Check out a sample Q&A here

Similar questions

If Bergen Air Systems takes out a $100,000 loan, with eight equal principal payments due over the next eight years, how much will be accounted for as a current portion of a noncurrent note payable each year?
You put $600 in the bank for 3 years at 15%. A. If Interest Is added at the end of the year, how much will you have in the bank after one year? Calculate the amount you will have in the bank at the end of year two and continue to calculate all the way to the end of the third year. B. Use the future value of $1 table In Appendix B and verify that your answer is correct.
You put $250 in the bank for S years at 12%. A. If interest is added at the end of the year, how much will you have in the bank after one year? Calculate the amount you will have in the bank at the end of year two and continue to calculate all the way to the end of the fifth year. B. Use the future value of $1 table in Appendix B and verity that your answer is correct.
Cost of Bank Loan Mary Jones recently obtained an equipment loan from a local bank. The loan is for 15,000 with a nominal interest rate of 11%. However, this is an installment loan, so the bank also charges add-on interest. Mary must make monthly payments on the loan, and the loan is to be repaid in 1 year. What is the effective annual rate on the loan (assuming a 365-day year)?
Use the tables in Appendix B to answer the following questions. A. If you would like to accumulate $4,200 over the next 6 years when the interest rate is 8%, how much do you need to deposit in the account? B. If you place $8,700 in a savings account, how much will you have at the end of 12 years with an interest rate of 8%? C. You invest $2,000 per year, at the end of the year, for 20 years at 10% interest. How much will you have at the end of 20 years? D. You win the lottery and can either receive $500,000 as a lump sum or $60,000 per year for 20 years. Assuming you can earn 3% interest, which do you recommend and why?
Columbia Bank & Trust has just given you a $20,000 term loan to pay for a new concrete mixer. The loan requires five equal annual end-of-the-year payments. If the loan provides the bank with a 12 percent return, what will be your annual payments? a. $5,547.85 b. $6,000 c. $3,148.12 d. $1,666.67
:A company borrowed (100000$) from a bank and decided to repay this dept by a series payments (payment every 6 months for 5 years). The bank put a condition about the payment that every payment should increase by (1000$) each time. If the interest rate is (% 9) compounded quarterly, determine the amount of each payment?
A bank is negotiating a loan. The loan can either be paid off as a lump sum of $140,000 at the end of five years, or as equal annual payments at the end of each of the next five years. If the interest rate on the loan is 10%, what annual payments should be made so that both forms of payment are equivalent? A.
Your company borrows $500,000 from a bank to finance the purchase of a new machine. The nominal annual Interest rate Is 8%. The loan is to be fully amortized over 2 years, with equal payments made at the end of each 6-month perlod. 1. What will be the total amount of loan principal repald during the entire first year? 2. What will be the total amount of Interest pald during the entire second year? (Note: For each question, please show detalled explanations as to how you proceed to your answer along with detailed calculations).
Van Buren Resources Inc. is considering borrowing $120,000 for 168 days from its bank. Van Buren will pay $7,000 of interest at maturity, and it will repay the $120,000 of principal at maturity. Assume that there are 365 days per year. Calculate the loan’s annual financing cost. Round your answer to two decimal places. % Calculate the loan’s annual percentage rate. Round your answer to two decimal places. %