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- 14. In a discount interest loan, you pay the interest payment up front. For example, if a 1-year loan is stated as $10,000 and the interest rate is 10%, the borrower "pays" .10 × $10,000 = $1,000 immediately, thereby receiving net funds of $9,000 and repaying $10,000 in a year. a. What is the effective interest rate on this loan? (Round your answer to 2 decimal places.) b. If you call the discount d (for example, d = 10% using our numbers), express the effective annual rate on the loan as a function of d. c. Is the effective annual rate always greater than the stated rate d?3. Suppose you are considering a PLAM with the following characteristics: Mortgage Amount = $175,000 30-Year Term Monthly Payments Current Real Rate = 5.50 percent Expected Inflation Rates: EOY1 = 3%, EOY2 = -2%, EOY3 thru EOY30 = 0% Annual Payment Adjustments A. What is the APR of this loan? Answer: B. What is the effective cost if the loan is repaid at the end of year 2? Answer: C. Suppose that, instead of repaying the loan, you continue to make the payments and your monthly payment in year 4 is 1,043.09. What was the inflation rate for year 3? Answer:2. Which of the following alternatives would you rather receive, assuming an interest rate of 8% per year? Alternative 1: Receive $100 today: Alternative 2: Receive $120 two years from now
- 1. If you receive $176 each month for 12 months and the discount rate is 0.04, what is the future value? (show the process and can use financial calculator)18. You are borrowing $700,000 for 30 years at 6% annually. The lender is charging you a 2 point fee. What is the effective interest rate (effective borrowing cost)?1. If you receive $29 each quarter for 19 years and the discount rate is 0.05, what is the present value? (show the process and can use financial calculator)
- Use the following 10% present value factors: N 1: 0.9091 N = 2: 0.8264 N= 3: 0.7513 Assume you wish to receive $1,000 at the end of two years. Assuming an interest rate of 10% what amount would you need to deposit todayin order to receive the S1, 000? Round to the nearest penny if necessary.4. If you receive $116 each month for 28 years and the discount rate is 0.08, what is the present value? (show the process and can use financial calculator)You are loaned $300 at the end of years 1, 2, and 3. You pay this loan back with payments of X at the end of year 5, and $300 at the end of years 4, 6, and 7. Find X if the effective annual interest rate i = .07
- Hi, How do I solve these questions using formulas? Additional info for the questions: Unless otherwise stated, assume the effective interest rate per year is 12% ThanksWhat is the present value of $1,300 due in 14 years at a 7 percent interest rate and 12 percent interest rate? Do not round intermediate calculations. Round your answers to the nearest cent. Present value at 7%: $ Present value at 12%: $ Explain why the present value is lower when the interest rate is higher. I. The less interest you can earn during an investment period, the less you need to invest today to receive a particular amount in the future. II. The more interest you can earn during an investment period, the less you need to invest today to receive a particular amount in the future. III. The more interest you can earn during an investment period, the more you need to invest today to receive a particular amount in the future. -Select- v2. If you receive $99 each quarter for 17 years and the discount rate is 0.05, what is the future value? (show the process and can use financial calculator)