3.4.Suppose you recently bought a house for R1 650 000 and secured a home loanfrom the bank, with an interest rate of 9% per annum (compounded monthly) for a20-year (240-month) term. You are obligated to make equal monthly payments, andyour first payment is due in one month's time. However, after reviewing the bank'srepayment calculation, you realize that you can afford to pay R1 000 more eachmonth.How many months less will it take you to repay the home loan if you consistentlymake an additional monthly payment of R1 000. You may assume that the interestrate will remain fixed over the term of the home loan.a) 203.24 months.b) 0.24 monthsc) 36.76 monthsd) 60.10 monthse) None of the aboveNombulelo Makwete has been shopping around for a loan to finance the purchaseof a used car she is buying. She needs to borrow R205 000. She found four offersthat seem to be attractive, but would like to choose the offer with the lowest annualinterest rate. The information she was provided by the banks were as follows:LoanABCDa) Loan Ab) Loan Bc) Loan CPrincipleamountd) Loan De) None of the aboveR205 000,00R205 000,00R205 000,00R205 000,00Monthlypayment-R9 842,64-R7 207,19-R5 448,90-R4 169,49You may assume that the interest on all four loans above are compounded monthly.Which loan should Nombulelo take if she wants to choose the loan with the lowestannual interest rate?2Repaymentterm(months)24364872

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3. Suppose you recently bought a house for R1 650 000 and secured a home loan from the bank, with an interest rate of 9% per annum (compounded monthly) for a 20-year (240-month) term. You are obligated to make equal monthly payments, and your first payment is due in one month's time. However, after reviewing the bank's repayment calculation, you realize that you can afford to pay R1 000 more each month. How many months less will it take you to repay the home loan if you consistently make an additional monthly payment of R1 000. You may assume that the interest rate will remain fixed over the term of the home loan. a) 203.24 months b) 0.24 months c) 36.76 months d) 60.10 months e) None of the above the purchase

3. Suppose you recently bought a house for R1 650 000 and secured a home loan from the bank, with an interest rate of 9% per annum (compounded monthly) for a 20-year (240-month) term. You are obligated to make equal monthly payments, and your first payment is due in one month's time. However, after reviewing the bank's repayment calculation, you realize that you can afford to pay R1 000 more each month. How many months less will it take you to repay the home loan if you consistently make an additional monthly payment of R1 000. You may assume that the interest rate will remain fixed over the term of the home loan. a) 203.24 months b) 0.24 months c) 36.76 months d) 60.10 months e) None of the above the purchase

Corporate Fin Focused Approach

5th Edition

ISBN:9781285660516

Author:EHRHARDT

Publisher:EHRHARDT

Chapter4: Time Value Of Money

Section4.17: Amortized Loans

Problem 1ST

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Suppose you recently bought a house for R1 650 000 and secured a home loan from the bank, with an interest rate of 9% per annum (compounded monthly) for a 20-year (240-month) term. You are obligated to make equal monthly payments, and your first payment is due in one month’s time. However, after reviewing the bank’s repayment calculation, you realize that you can afford to pay R1 000 more each month. How many months less will it take you to repay the home loan if you consistently make an additional monthly payment of R1 000. You may assume that the interest rate will remain fixed over the term of the home loan. a) 203.24 months b) 0.24 months c) 36.76 months d) 60.10 months e) None of the above
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