You just purchased a vacant lot for your future son-in-law's home for $30,000. You financed that amount over 120 months. What would your monthly payment be if your interest rate was 12% compounded monthly? a) $430.41 b) $389.21 c) $231.22 d) $189.02

You just purchased a vacant lot for your future son-in-law's home for $30,000. You financed that amount over 120 months. What would your monthly payment be if your interest rate was 12% compounded monthly? a) $430.41 b) $389.21 c) $231.22 d) $189.02

EBK CFIN

6th Edition

ISBN:9781337671743

Author:BESLEY

Publisher:BESLEY

Chapter4: Time Value Of Money

Section: Chapter Questions

Problem 25PROB

See similar textbooks

Related questions

Q: Suppose James will have $25,000.00 for a down payment on a house in 6 years. How much would he have…

A: The question is based on the concept of future value calculation of an investment with a monthly…

Q: our family just took out a 1-year $5000 personal loan to finance a home improvement project. The…

A: The given problem can be solved using PMT function in excel. PMT provides amount of payment for a…

Q: Suppose your parents decide to give you $10,000 to be put in a college trust fund that will be paid…

A: Present value = $10,000 Interest rate per period, r = 1.5% Number of compounding periods, n = 5 × 4…

Q: A couple wants to purchase a house. Suppose they invest $500 per month into an ordinary annuity. How…

A: A series of fixed payments that are paid or received at an equal time interval is term as the…

Q: Your uncle is about to retire, and he wants to buy an annuity that will provide him with $95,000 of…

A: Annual Payment (P) = $95,000Interest rate (r) = 4.70% or 0.047Number of years (n) = 20Payment timing…

Q: You invest $ 1.000 in a bank account to buy a house at annual interest rate 14 per year, compounded…

A: Present Value (Investment in bank)= $1,000 Annual Interest rate (r)= 14% per year compounded monthly…

Q: Your uncle gives you $92,000 as a gift. Rather than give you a lump-sum, your uncle structures the…

A: Giftable amount (PV) is $92000 Annunity per year (PMT) is $16,250 Interest rate is 12% To Find:…

Q: Your grandmother will be gifting you $150 at the end of each month for four years while you attend…

A: Monthly gift amount = $150Year = 4Discount rate = 3.7%To find: The worth of these payments on the…

Q: Pretend that you are saving up for a down payment on a car or house. Pretend that we get an…

A: A savings account seems to be an account that is opened by a salaried person. It is a very basic…

Q: A family has a goal of saving $31,000 to be used as the down payment for a house. If they put…

A: The number of years it will take to reach the amount of $31,000 can be determined using NPER…

Q: An aunt gifts you with $12,000, but only after you invest it for one year. She gives you two…

A: INTEREST RATE 4.2% 7.1% PERIOD 12 12 PMT 0 1000 PRESENT VALUE $12,000 0

Q: A man wants to set up a 529 college savings account for his granddaughter. How much would he need to…

A: Annual Deposit is that amount which is required to deposit by investor every year for receiving the…

Q: 4. You wish to purchase a house that costs $294,000, and the bank requires you to have 12% of the…

A: A down payment is an early stage payment made for a particular good purchased through financing.

Q: Your first child was just born and you want to set up an annuity due savings plan to finance her…

A: Future Value is the amount which is received by the investor at the end of some specified period of…

Q: You estimate you need to supplement your social security payments with monthly withdrawals of…

A: The question is based on the concept present value of annuity payment Formula as, Pv=pmt*1-(1+r)-nr

Q: Your grandmother invested $1,000 for you the day you were born. How much will this investment be…

A: Data given: Principal (PV)=$1000 n=30 years Rate= 6% (compounded quarterly) Required: FV of this…

Q: You are hoping to buy a house in the future and recently received an inheritance of $16, 000. You…

A: The FV of an investment refers to the total value of its cash flows at a particular future date…

Q: If you desire to have $25,000 for a down payment for a house in five years, what amount would you…

A: PV = Present Value (what you want to find out)FV = Future Value (in this case, $25,000)r = Interest…

Q: you would earn if you paid $1

A: A perpetuity is a series of uniform cash flows over an indefinite period of time.

Q: You just inherited some money, and you decide to put $70,000 in an account that pays 3.25% interest,…

A: Given:P = $70,000r = 3.25% or 0.0325 in decimaln = 10 years

Q: What is the amount you would have to deposit today to be able to take out $2070 a year for 2 years…

A: As per Bartleby Honor Code, when multiple questions are asked, the expert is required only to solve…

Q: Your uncle is about to retire, and he wants to buy an annuity that will provide him with $97,000 of…

A: The objective of this question is to calculate the present value of an annuity due. An annuity due…

Q: Abby Ellen wants to attend Ithaca College. She will need $75,000 6 years from today. Assume Abby's…

A: Present value refers to the current value of the asset available at some future date. It is…

Q: Suppose that you borrow $11,000 for five years at 5% toward the purchase of a car. whats the…

A: Given: Amount borrowed = $11,000 Time =5 years or 5*12 =60 periods Rate =5% or 0.05/12 =0.42%

Q: Hank made payments of $106 per month at the end of each month for 30 years to purchase a piece of…

A: Here, Monthly payment = $106 per month Total number of years = 30 years Selling price of property =…

Q: If you desire to have $15,000 for a down payment for a house in six years, what amount would you…

A: The estimation of future discounted cash flows is done through present value analysis. When…

Q: If you desire to have $10,000 for a down payment for a house in five years, what amount would you…

A: Calculation of Amount to Deposit Today:The amount to deposit today is $7,835.26.Excel Spreadsheet:

Q: If you desire to have $15,000 for a down payment for a house in six years, what amount would you…

A: Future Value = $15,000 n = No of years = 6 years r = rate of interest = 2% Present value = Future…

Q: Suppose you buy a home and finance $265,000 at $2,223.17 per month for 30 years. What is the amount…

A: Cost of home= $265,000 Financing pattern= $2,223.17 per month for 30 years Amount of Interest=?

Q: A relative has promised to pay you $93.00 today, and he will pay you additional payments every year…

A: The future value of different cash flows is added together to get the accumulated amount in the…

Concept explainers

Cost of Credit

The cost of credit is an extra amount that the borrower has to pay besides the loan amount. These credit charges may vary from loan to loan. The cost of credit includes interest charges, maintenance charges, and arrangement charges. Some of the costs are mandatorily collected by the lender based on the loan amount and tenure of the loan. The cost of credit is also called finance charges of the credit.

Question

You just purchased a vacant lot for your future son-in-law's home for $30,000. You financed
that amount over 120 months. What would your monthly payment be if your interest rate was
12% compounded monthly?
a) $430.41
b) $389.21
c) $231.22
d) $189.02

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: Analysis

VIEW

Step 2: Calculation of monthly payment

VIEW

Solution

VIEW

Step by step

Solved in 3 steps with 2 images

SEE SOLUTION Check out a sample Q&A here

Knowledge Booster

Learn more about

Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, finance and related others by exploring similar questions and additional content below.

Similar questions

If you desire to have $15,000 for a down payment for a house in six years, what amount would you need to deposit today? Assume that your money will earn 2 percent.
An aunt gifts you with $12,000, but only after you invest it for one year. She givesyou two choices.1. Invest the entire sum at 4.2% compounded monthly.2. Invest $1000 at 7.1% each month in an annuity that pays every month.(a) What is the future value of the money invested with method 1?(b) How much interest is earned with method 1?(c) What is the future value of the money invested with method 2?(d) How much interest is earned with method 2?(e) Which method would you choose?
If you desire to have $15,000 for a down payment for a house in six years, what amount would you need to deposit today? Assume that your money will earn 2 percent. Use the appropriate factor(s) from the tables provided
Your uncle is about to retire, and he wants to buy an annuity that will provide him with $97,000 of income a year for 20 years, with the first payment coming immediately. The going rate on such annuities is 5.45%. How much would it cost him to buy the annuity today? a. $1,192,059.14 b. $1,164,011.03 c. $1,195,837.87 d. $1,261,011.03 e. $1,227,449.63
Suppose James will have $25,000.00 for a down payment on a house in 6 years. How much would he have to invest today (present value) if his investment earns a nominal rate of 5 ¼ % compounded monthly? b. How much interest did James’s account earn during the 6 years?
Your grandmother invested $1,000 for you the day you were born. How much will this investment be worth on your 30th birthday, assuming the investment earned 6% interest compounded quarterly?
Hank made payments of $106 per month at the end of each month for 30 years to purchase a piece of property. He promptly sold it for $99,810. What annual interest rate would he need to earn on an ordinary annuity for a comparable rate of return? ◻️٪؜ (Round to the nearest hundredth as needed.)
What’s the rate of return you would earn if you paid $1,500 for a perpetuity that pays $105 per year?
Suppose your parents decide to give you $10,000 to be put in a college trust fund that will be paid in equally quarterly installments over a 5 year period. If you deposit the money into an account paying 1.5% per quarter, how much are the quarterly payments (Assume the account will have a zero balance at the end of period.)
You would Ilike to have $59,000 in 5 years for the down payment on a new house following graduation by making deposits at the end of every three months in an annuity that pays 4.25% compounded quarterly. (a) How much should you deposit at the end of every three months? (b) How much of the $59,000 comes from deposits? (c) How much of the $59,000 comes from interest? (Round UP to the nearest dollar. For example, $247) OPensyrooo n 21 l 1e0 (6)' s 6Tei 0hcc doirdW (b)Saaviz wDi 26. 7 1 0 59.000 6 00
A couple wants to purchase a house. Suppose they invest $500 per month into an ordinary annuity. How much will they have for a down payment after 9 years if the annual interest rate is 9% compounded monthly?
11) Max purchases a lot for $300,000. Max will pay $25,000 dollars at the end of each year. the interest rate is 4% compounded annually, how many full payments must be made? a) what will be the size of the payment one year after the last full payment?