(1) A 10-year loan of 30,000 may be repaid under the following two methods: (a) amortization method with equal annual payments at an annual effective interest rate of 7.5%. (b) sinking fund method in which the lender receives an annual effective interest rate of 9% and the sinking fund earns an annual effective interest rate of j. Both methods require a payment of X to be made at the end of each year for 10-years. Calculate j.

(1) A 10-year loan of 30,000 may be repaid under the following two methods: (a) amortization method with equal annual payments at an annual effective interest rate of 7.5%. (b) sinking fund method in which the lender receives an annual effective interest rate of 9% and the sinking fund earns an annual effective interest rate of j. Both methods require a payment of X to be made at the end of each year for 10-years. Calculate j.

Essentials Of Investments

11th Edition

ISBN:9781260013924

Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.

Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.

Chapter1: Investments: Background And Issues

Section: Chapter Questions

Problem 1PS

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The following loan is fully amortizing. The loan is for $12,000 at 5% interest to be repaid over three (3) years. Amortize this loan on a monthly basis. Calculate the interest portion of the fourth (4th) payment considering that an additional payment of $2,000 was made with the second payment.
The payment necessary to amortize a 4.9% loan of $86,000 compounded annually, with 4 annual payments is $24,196.70. The total of the payments is $96,786.80 with a total interest payment of $10,786.80. The borrower made larger payments of $25,000.00. Calculate (a) the time needed to pay off the loan, (b) the total amount of the payments, and (c) the amount of interest saved. a. The time needed to pay off the loan with payments of $25,000.00 is _____ years. (Round up to the nearest year.) b. The total amount of the payments is $______ (Round to the nearest cent as needed.) c. The amount of interest saved is $______. (Round to the nearest cent as needed.)
A student loan is offered under the following conditions: credit of 30, 000 euros at 3% over a period of 6 years contracted on June 1, 2020; no repayment or interest payments for 2 years; The re-payment is provided in 4 constant annual instalments paid on June 1st for the following 4 years. a) Calculate the constant annuities of this credit. b) Draw the amortization table Years (payment in June) Principal repaid Interest paid Annual payments outstanding capital
A loan is being repaid by 15 annual instllments of 1000 each. Interest is at an effec- tive annual rate of 5%. Immediately after the fifth installment is paid, the loan is renegotiated. The revised amortization schedule calls for a sixth installment of 800, a seventh installment of 800 + K, with each subsequent installment increasing by K over the previous payment. The period of the loan is not changed. Determine the revised amount of the last installment.
Using the PVIFA table determine the annual payment on a $600,000, 10 percent, business loan from a commercial bank that is to be amortized over a five-year period
Use the sinking fund formula shown to the right to determine the semiannual payments with 8% interest are compounded semiannually for 4 years to accumulate $24,000.
The payment necessary to amortize a 4.5% loan of $81,000 compounded annually, with 5 annual payments is $18,451.12. The total of the payments is $92,255.60 with a total interest payment of $11,255.60. The borrower made larger payments of $19,000.00. Calculate (a) the time needed to pay off the loan, (b) the total amount of the payments, and (c) the amount of interest saved. Thank you~
Please no excel. Thanks An 18-year loan of 21,000 may be repaid under the following two methods: amortization method with equal annual payments at an annual effective rate of 6.1% sinking fund method in which the lender receives an annual effective rate of 6.450% and the sinking fund earns an annual effective rate of j. Both methods require payment of X to be made at the end of each year for 18 years. Calculate j. Round your answer to one decimal place
Kirk Company purchased equipment by making a down payment of P400,000 and issuing a note payable for P1,800,000. A payment of P600,000 is to be made at the end of each year for three years. The applicable rate of interest is 8%. The present value of an ordinary annuity of 1 for three years at 8% is 2.58, and the present value for the future amount of a single sum for three years at 8% is .735. Shipping charges for the equipment of P200,000 and installation charges of P350,000 were incurred. What is the capitalized cost of the equipment?
A company borrowed an amount of 400,000 dinars for a period of four years at a compound interest at an annual rate of 5% and pledged to repay the loan and its interest together in equal installments, each of which pays the end of the loan period. Find the following: 1) the value of the fixed payment 2) the form of the loan amortization table rounded to the nearest dinar 3) Calculate the amount Paid after the second payment 4) Calculate the remaining amount after paying the third payment
Determine the annual payment on a OMR 500,000 and 12 percent business loan from a commercial bank that is to be amortized over a five year period.
A loan of £97,550 is repayable by an annuity payable annually in arrears for 17 years. After the first repayment instalment, subsequent repayment instalments are to be increased by £300 each year. The repayment instalments were calculated using a rate of interest of 5.3% per annum effective. (i) Calculate, to 2 decimal places, the amount of the first repayment instalment: (ii) Calculate, to 2 decimal places, the loan outstanding after the first 10 payments: £ (iii) Immediately after the 10th repayment instalment, the interest rate on the outstanding loan is increased to 6.7% per annum effective and future instalments are kept level, equal to the instalment amount paid at the end of the 10th year. (a) Calculate the adjusted remaining term of the new loan (in whole years): (b) Calculate, to 2 decimal places, the amount of repayment (X) made in the final year: £

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