PERSONAL FINANCE
5th Edition
ISBN: 9781308498706
Author: Kapoor
Publisher: McGraw Hill
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Question
Chapter 10, Problem 7CC
Summary Introduction
Case summary:
J and R are newlyweds. They have just purchased their home and J and R are going to be parents of twins. They need to consider the insurance needs. With a family, a home and coming twins, they need to develop a plan to help them ready for an unexpected event.
Character in this case: J and R.
Adequate information:
Checking account: $4,300
Savings account: $22,200
Emergency fund savings account: $20,500
IRA balance: $26,000
Car: $10,000 (J) and $18,000 (R)
Student loan balance: $0
Credit card balance: $2,000
Car loans: $6,000
J: $50,000 gross income ($37,500 net income after taxes)
R: $75,000 gross income ($64,000 net income after taxes)
Mortgage: $1,252
Property taxes and insurance: $500
Utilities: $195
Food: $400
Gas/maintenance: $275
Credit card payment: $250
Car loan payment: $289
Entertainment: $300
To determine:
Type of automobile coverage for them.
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John wants to buy a property for $105,000 and wants an 80 percent loan for $84,000. A lenderindicates that a fully amortizing loan can be obtained for 30 years (360 months) at 6 percentinterest; however, a loan fee of $3,500 will also be necessary for John to obtain the loan.a. How much will the lender actually disburse?b. What is the APR for the borrower, assuming that the mortgage is paid off after 30 years (fullterm)?c. If John pays off the loan after five years, what is the effective interest rate? Why is it differ-ent from the effective interest rate in (b)?d. Assume the lender also imposes a prepayment penalty of 2 percent of the outstanding loanbalance if the loan is repaid within eight years of closing. If John repays the loan after fiveyears with the prepayment penalty, what is the effective interest rate?
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Chapter 10 Solutions
PERSONAL FINANCE
Ch. 10 - Prob. 10.1PQ1Ch. 10 - Prob. 10.1PQ2Ch. 10 - 3. What is the difference between pure risk and...Ch. 10 - Prob. 10.1PQ4Ch. 10 - Prob. 10.1PQ5Ch. 10 - Prob. 10.2PQ1Ch. 10 - Prob. 10.2PQ2Ch. 10 - Prob. 10.3PQ1Ch. 10 - Prob. 10.3PQ2Ch. 10 - Prob. 10.3PQ3
Ch. 10 - Prob. 10.4PQ1Ch. 10 - Prob. 10.4PQ2Ch. 10 - Prob. 10.5PQ1Ch. 10 - Prob. 10.5PQ2Ch. 10 - Prob. 10.5PQ3Ch. 10 - Prob. 10.5PQ4Ch. 10 - Prob. 10.6PQ1Ch. 10 - Prob. 10.6PQ2Ch. 10 - Prob. 1FPPCh. 10 - Prob. 2FPPCh. 10 - Prob. 3FPPCh. 10 - Prob. 4FPPCh. 10 - Prob. 5FPPCh. 10 - Prob. 6FPPCh. 10 - Prob. 7FPPCh. 10 - Prob. 8FPPCh. 10 - Prob. 9FPPCh. 10 - Prob. 10FPPCh. 10 - Prob. 11FPPCh. 10 - Prob. 1FPACh. 10 - Prob. 2FPACh. 10 - Prob. 3FPACh. 10 - Prob. 4FPACh. 10 - Prob. 6FPACh. 10 - Prob. 7FPACh. 10 - Prob. 8FPACh. 10 - Prob. 1FPCCh. 10 - Prob. 2FPCCh. 10 - Prob. 3FPCCh. 10 - Prob. 4FPCCh. 10 - Prob. 1CCCh. 10 - Prob. 2CCCh. 10 - Prob. 3CCCh. 10 - Prob. 4CCCh. 10 - Prob. 5CCCh. 10 - Prob. 6CCCh. 10 - Prob. 7CCCh. 10 - Prob. 8CCCh. 10 - What information from your Daily Spending Diary...Ch. 10 - 2. How can your spending habits be developed to...
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