FINANCIAL ACCT.FUND.(LOOSELEAF)
7th Edition
ISBN: 9781260482867
Author: Wild
Publisher: MCG
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Question
Chapter B, Problem 10E
To determine
Annuity:
An annuity refers to a series of fixed
To identify: The borrowed money.
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Compute the amount that can be borrowed under each of the following circumstances: (PV of $1. FV of $1. PVA of $1, and FVA of $1)
(Use appropriate factor(s) from the tables provided. Round your "Table value" to 4 decimal places.)
1. A promise to repay $93,000 eight years from now at an interest rate of 9%.
2. An agreement to make three separate annual payments of $17,000, with the first payment occurring 1 year from now. The annual
interest rate is 4%.
Option 1
Loan amount
Option 2
Annual payments
Table Value
Table Value
Amount
Amount
Present Value
Present Value
Use the following amortization chart:
Selling price of home
Down payment
Principal (loan)
Rate of interest
Years
Payment per $1,000
Monthly mortgage payment
$ 79,000
$ 6,000
$ 73,000
6%
30
$ 5.9955
$ 437.67
Assume the interest rate rises to 7.5%. What is the total cost of interest with the new interest rate? (Use Table 15.1).
Note: Round your intermediate calculations and final answer to the nearest cent.
Total cost of interest: ?????
The answer is NOT $110,753.57
TABLE 15.1
Amortization table (mortgage principal and interest per $1,000)
Rate
Interest Only
10 Year
15 Year
20 Year
25 Year
30 Year
40 Year
2.000
0.16667
9.20135
6.43509
5.05883
4.23854
3.69619
3.02826
2.125
0.17708
9.25743
6.49281
5.11825
4.29966
3.75902
3.09444
2.250
0.18750
9.31374
6.55085
5.17808
4.36131
3.82246
3.16142
2.375
0.19792
9.37026
6.60921
5.23834
4.42348
3.88653
3.22921
2.500
0.20833
9.42699
6.66789
5.29903
4.48617
3.95121
3.29778
2.625
0.21875
9.48394
6.72689
5.36014
4.54938…
Use the following amortization chart:
Selling price of home
Down payment
Principal (loan)
Rate of interest
Years
Payment per $1,000
Monthly mortgage payment
$ 79,000
$ 6,000
$ 73,000
6%
30
$ 5.9955
$ 437.67
Assume the interest rate rises to 7.5%. What is the total cost of interest with the new interest rate? (Use Table 15.1).
Note: Round your intermediate calculations and final answer to the nearest cent.
Total cost of interest:???
Chapter B Solutions
FINANCIAL ACCT.FUND.(LOOSELEAF)
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