You purchase a plot of land worth $56,000 to create a community garden, by securing a 20-year loan charging 8.79% APR, compounded monthly, and re monthly payments of $405. Round all answers to the nearest dollar. a. Assuming that you put some money down, what was your original loar amount? Original Loan Amount: $ b. What is the outstanding balance on your loan after making 5 years of раyments? Outstanding Balance After 5 Years: $ c. How much equity do you have in the garden after 5 years? Equity After 5 Years: $

You purchase a plot of land worth $56,000 to create a community garden, by securing a 20-year loan charging 8.79% APR, compounded monthly, and re monthly payments of $405. Round all answers to the nearest dollar. a. Assuming that you put some money down, what was your original loar amount? Original Loan Amount: $ b. What is the outstanding balance on your loan after making 5 years of раyments? Outstanding Balance After 5 Years: $ c. How much equity do you have in the garden after 5 years? Equity After 5 Years: $

EBK CONTEMPORARY FINANCIAL MANAGEMENT

14th Edition

ISBN:9781337514835

Author:MOYER

Publisher:MOYER

Chapter5: The Time Value Of Money

Section: Chapter Questions

Problem 15P

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Concept explainers

Loans

A loan is a term that we are all familiar with. The processing of loans is one of the most important functions of a bank. It keeps our economy stable and facilitates the implementation of monetary policies. Let's take a look at the different forms of loans and get some answers to some common questions.

Question

You purchase a plot of land worth $56,000 to create a community garden, by
securing a 20-year loan charging 8.79% APR, compounded monthly, and requiring
monthly payments of $405. Round all answers to the nearest dollar.
a. Assuming that you put some money down, what was your original loan
amount?
Original Loan Amount: $
b. What is the outstanding balance on your loan after making 5 years of
рayments?
Outstanding Balance After 5 Years: $
c. How much equity do you have in the garden after 5 years?
Equity After 5 Years: $

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