You are looking at a one-year loan of $18,000. The interest rate is quoted as 7.4 percent plus two points. A point on a loan is 1 percent (one percentage point) of the loan amount. Quotes similar to this one are common with home mortgages. The interest rate quotation in this example requires the borrower to pay two points to the lender up front and repay the loan later with 7.4 percent interest. a. What rate would you actually be paying here? (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 for a one-year loan with a quoted interest rate of 10.4 percent plus two points? (Do not round intermediate calculations and enter your answer as a percent rounded to 2 decimal places, e.g., 32.16.)

You are looking at a one-year loan of $18,000. The interest rate is quoted as 7.4 percent plus two points. A point on a loan is 1 percent (one percentage point) of the loan amount. Quotes similar to this one are common with home mortgages. The interest rate quotation in this example requires the borrower to pay two points to the lender up front and repay the loan later with 7.4 percent interest. a. What rate would you actually be paying here? (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 for a one-year loan with a quoted interest rate of 10.4 percent plus two points? (Do not round intermediate calculations and enter your answer as a percent rounded to 2 decimal places, e.g., 32.16.)

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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You get a 7.125% mortgage loan with front-end loan charges of $3,800. Will your APR be: (a) less than 7.125% (b) exactly 7.125% (c) greater than 7.125%
You plan to borrow $40,100 at a 6.9% annual interest rate. The terms require you to amortize the loan with 7 equal end-of-year payments. How much interest would you be paying in Year 2? O a. $2,446.20 O b. $2,479.22 O c. $2,766.90 O d. $6,936.17 O e. $7,414.76
Consider a home mortgage of $125,000 at a fixed APR of 4.5% for 25 years. a. Calculate the monthly payment. b. Determine the total amount paid over the term of the loan. c. Of the total amount paid, what percentage is paid toward the principal and what percentage is paid for interest. ..... a. The monthly payment is $ (Do not round until the final answer. Then round to the nearest cent as needed.)
Please eolve this question on excell and show formulas please.
You are offered an add-on loan for $4,500 at 18% for 5 years. What is the monthly payment? What is the amount of interest? What is the true interest rate cost of this loan? If you could pay the same loan above at a compound rate: What would the monthly payment be? What would the amount of interest be? Prepare a monthly payment schedule for each loan above using Excel, and submit it. Suppose that you are only allowed to make a balloon payment to the principal of the compound interest loan. You have $1,000 to put down at the beginning of year three. How many payments will you save?
Find the APR of the loan given the amount of the loan, the number and type of payments, and the add-on interest rate. Loan amount, $9,000; three yearly payments; rate = 8% The annual percentage rate is%. (Type an integer or a decimal.)
If a lender makes a simple loan of $500 for 5 years and charges 3%, then the amount that the lender receive at maturity is $ (Round your response to the nearest two decimal place) If a lender makes a simple loan of $2000 for one year and charges $90 interest, then the simple interest rate on that loan is %. (Round your response to the nearest whole number) If a borrower must repay $106.50 one year from today in order to receive a simple loan of $100 today, the simple interest on this loan is OA. 6.0% OB. 6.5% OC. 65% OD. 5.0%
1. A loan with the following terms is being made: Fixed rate, constant payment 9% interest rate $70,000 desired mortgage amount. $1,500 loan discount points paid by the buyer/borrower to the lender 25-year term, monthly payments a. Calculate the APR for federal truth-in-lending purposes (assume that the discount points are paid up front by the borrow and rolled into the loan principal). b. Do you think that the APR calculated in (a) reflects the likely return that the lender will receive over the term of the loan? List specific reasons that the lender's actual return might be different than the APR.
4) I have an NOI of$172,400. The lender indicated that I can borrow funds at a 7.0% interest rate with a 25 year amortization and 5 year term at a 1.20 Debt Service Ratio(DCR). The lender will charge 2 points. a. What is the monthly payment? b.What is the APR (annual percentage rate) if fully amortized? C.What is the APR at the end of the loan term? d.What if I pay the loan off at the end of the second year, what is my APR? e.What if there was a prepayment penalty of 1.5% at the end of year 4, what is myAPR?
Suppose you earn a gross income of $2,915.00 per month and apply for a mortgage with a monthly PITI of $900.74. You have other financial obligations totaling $174.90 per month. If the lending ratio guidelines are as given in the table below, what type of mortgage, if any, would you qualify for? Mortgage Type Housing Expense Ratio Total Obligations Ratio FHA 29% 41% Conventional 28% 36% O FHA only O Conventional only O FHA and Conventional O None of the above
You take out a 15-year FRM for $500,000. The bank offers 5% interest rate but charges you a loan fee of 5% of the total loan amount. What is the actual cost of borrowing of this mortgage? 0.42% 0.48% 5.00% 5.79%
Consider a borrower who took a loan worth 10000 at the beginning of period 1. The loan is to be repaid over 20 periods. Furthermore, assume that the interest rate is equal to 5%. How much does the borrower owe in debt at the beginning of period 3? Don't use Excel

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