Use the following information to answer the question: Loan amount: $245,000 Loan term: 30 years Contract interest rate: 6.00% Monthly payment: $1,468.8988 Total up-front financing costs paid to lender: $9,100 Up-front financing costs paid to third party service providers: $2.900 Calculate the lender's expected yield/IRR if the lender expects the borrower to keep the loan outstanding for the entire loan term. None of the selections is correct 6.36% O 6.00% 6.48%

Use the following information to answer the question: Loan amount: $245,000 Loan term: 30 years Contract interest rate: 6.00% Monthly payment: $1,468.8988 Total up-front financing costs paid to lender: $9,100 Up-front financing costs paid to third party service providers: $2.900 Calculate the lender's expected yield/IRR if the lender expects the borrower to keep the loan outstanding for the entire loan term. None of the selections is correct 6.36% O 6.00% 6.48%

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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Need Detailed answer with steps please 30. Considering the following information, what is the NPV if the borrower refinances the loan? Expected holding period: 3 years, Current loan balance: $100,000; Current loan interest: 7%; Current loan mortgage payment: $898.33; Remaining term on current mortgage: 15 years; New loan interest: 5.5%; New loan mortgage payment: $817.08; New loan term: 15 years; Cost of refinancing: $5,000. Assume that the opportunity cost is the interest rate on the new loan (5.5%). A. -$5,000.00 B. -$1,155.27 C. $3,844.73 D. $8,844.73
Which of the following statements is most correct? The first payment under a 3-year, annual payment, amortized loan for $1,000 will include a smaller percentage (or fraction) of interest if the interest rate is 5 percent than if it is 10 percent. If you are lending money, then, based on effective interest rates, you should prefer to lend at a 10 percent nominal, or quoted, rate but with semiannual payments, rather than at a 10.1 percent nominal rate with annual payments. However, as a borrower you should prefer the annual payment loan. The value of a perpetuity (say for $100 per year) will approach infinity as the interest rate used to evaluate the perpetuity approaches zero. Statements a, b, and c are all true. Statements b and c are true.
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?
Choose the best answer to the following question. Explain your reasoning with one or more complete sentences. What does a loan of $400,000 that carries a 4-point origination fee require as an advance payment? Choose the correct answer below. A. An advance payment of $1,600 is required. Each point is 1% of the loan amount, so the advance payment amount is 4% of $400,000. B. An advance payment of $16,000 is required. Each point is 1% of the loan amount, so the advance payment amount is 4% of $400,000. OC. An advance payment of $8,000 is required. Each point is 1% of the loan amount, so the advance payment amount is 4% of $400,000. OD. An advance payment of $16,000 is required. Each point is 10% of the loan amount, so the advance payment amount is 40% of $400,000. E. An advance payment of $8,000 is required. Each point is 10% of the loan amount, so the advance payment amount is 40% of $400,000. OF. An advance payment of $1,600 is required. Each point is worth between 50 and 100 points…
Use the appropriate function(s) in Excel to answer the following questions. How much would your monthly payment be on a 3-year loan if the following assumptions were true? You borrowed $7,400. The fixed APR on the loan is 3.2%. Note: A fixed APR is an annual interest rate that does not change during the 3-year period. You will make equal monthly payments to repay both the loan amount and the monthly interest charges. You want to completely pay off the loan in exactly 3 years. (Round to the nearest cent, do not include a negative sign) Note: while this money is "leaving your wallet" the negative sign should not be included in the numeric answer because it is already implied by the word "payment" What is the total amount that you would pay to the bank over this 3-year period? Hint: Be sure to use your rounded answer from the previous step in the calculation of this answer. (Round to the nearest cent, do not include a negative sign) How much total interest would you have paid…
Consider a 30-year fixed-rate home loan of $565,500 with an interest rate of 4.25%.What is the total amount of interest paid? (Round your answer to the nearest cent.)
Explain
Suppose that you decide to borrow $15,000 for a new car. You can select one of the following loans, each requiring regular monthly payments. Installment Loan A: three-year loan at 6.3% Installment Loan B: five-year loan at 5.2% Use PMT= nt] to complete parts (a) through (c) below. The total interest for Loan A is $1501.35. (Round to the nearest cent as needed.) b. Find the monthly payments and the total interest for Loan B. The monthly payment for Loan B is $284.42 (Do not round until the final answer. Then round to the nearest cent as needed.)
Give typing answer with explanation and conclusion Assume you want to borrow $300,000 and have been presented with two options. The first option is a fully amortizing loan with an interest rate of 3% and $4000 of origination fees and points. The second option is an interest only loan with an interest rate of 4% and $5000 of origination fees and points. Both loans are for 30 years and have monthly payments. Further assume that if the borrower chooses the interest only loan, any money saved on the monthly payment can be invested with a projected return of 7%. Also assume that the proceeds from the investment will first be used to pay off any remaining balance on the loan. How much money will the investor have left at the end of 30 years after repaying the loan? Group of answer choices None, the investor will owe $12,373.42 $323,060.72 $22,063.08 $30,750.78
A lender requires PMI that is 0.8% of the loan amount of $590,000. How much (in dollars) will this add to the borrower’s monthly payment? Round your answer to the nearest cent.
Compare the monthly payments and total loan costs for the following pairs of loan options. Assume that both loans are fixed rate and have the same closing costs. You need a $60,000 loan. Option 1: a 30-year loan at an APR of 7.15%. Option 2: a 15-year loan at an APR of 6.75%. Find the monthly payment for each option.
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%

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