5) Bozo owes $4000 due in one year and $8,000 due in six years. Bozo is allowed to pay off both loans after 4 years at 8% monthly. How much does Bozo pay?

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A: Quarterly payment (Q) = P 2500 r = 8% per annum = 2% quarterly n = 2 years 6 months = 10 quarters

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A: Amount available for mortgage payment= Debt Service Ratio * Monthly income -  Monthly Property taxes

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A:

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Cost of Credit

The cost of credit is an extra amount that the borrower has to pay besides the loan amount. These credit charges may vary from loan to loan. The cost of credit includes interest charges, maintenance charges, and arrangement charges. Some of the costs are mandatorily collected by the lender based on the loan amount and tenure of the loan. The cost of credit is also called finance charges of the credit.