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Essentials Of Investments
11th Edition
ISBN: 9781260013924
Author: Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher: Mcgraw-hill Education,
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If you wanted to pay off a loan of $20,000 in 10 years at a nominal interest rate of 7% compounded monthly, what would the size of your monthly payments need to be?
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- Suppose you invest $200 a month for 6 years into an account earning 9% compounded monthly. After 6 years, you leave the money, without making additional deposits, in the account for another 20 years. How much will you have in the end? $ Suppose instead you didn't invest anything for the first 6 years, then deposited $200 a month for 20 years into an account earning 9% compounded monthly. How much will you have in the end?arrow_forwardExplainarrow_forwardIf you take out an amortized loan of $33,000 with a 14 year term and 7.4% interest rate, what are the annual payments you need to make? Round to the nearest dollar.arrow_forward
- Suppose you want to buy a $159,000 home. You found a bank that offers a 30-year loan at 3.3% APR. What will be your monthly payment? (Round to the nearest cent.) How much would you end up paying the bank for the home after 30 years? (Round to the nearest cent.) $ Suppose you wanted to reduce the time of your loan to 25 years. What would be your new monthly payment? (Round to the nearest cent.) $ How much would you end up paying the bank for the home after 25 years? (Round to the nearest cent.) $ How much did you save by reducing the time of your mortgage loan? (Round to the nearest cent.) $arrow_forwardSuppose you invest $210,000 in an annuity that returns 6 annual payments, with the first payment one year from now and each subsequent payment growing by 5%. At an interest rate of 8%, how much is the first annual payment you receive? Equivalent problem structure (as a borrower): Suppose you borrow $210,000 to be paid back over 6 years with the first payment one year from now and each subsequent payment growing by 5%. At an interest rate of 8%, how much is the first annual payment? Please round your answer to the nearest hundredth.arrow_forwardSuppose you want to buy a $140,000 home. You found a bank that offers a 30-year loan at 3.3% APR. What will be your monthly payment? (Round to the nearest cent.) $ How much would you end up paying the bank for the home after 30 years? (Round to the nearest cent.) $ Suppose you wanted to reduce the time of your loan to 25 years. What would be your new monthly payment? (Round to the nearest cent.) $ How much would you end up paying the bank for the home after 25 years? (Round to the nearest cent.) S How much did you save by reducing the time of your mortgage loan? (Round to the nearest cent.) S Search hparrow_forward
- You are offered an add-on loan for $4,500 at 18% for 5 years. What is the monthly payment? What is the amount of interest? What is the true interest rate cost of this loan? If you could pay the same loan above at a compound rate: What would the monthly payment be? What would the amount of interest be? Prepare a monthly payment schedule for each loan above using Excel, and submit it. Suppose that you are only allowed to make a balloon payment to the principal of the compound interest loan. You have $1,000 to put down at the beginning of year three. How many payments will you save?arrow_forward2a) Consider a 4-year loan of $5,000 which you will pay back in 4 equal annual payments. If the loan has an 8% annual interest rate over the 4-year period, what would the size of each payment be? 2b) Of the payment you calculated for the first part of this question, how much of that payment would be the interest for the second payment and how much of that payment would be principal repayment for the loan?arrow_forwardA shady individual has approached you for a loan. He promises to pay you $500at the end of five years. If your required rate of return is a stated annualrate of 20%, compounded monthly, how much would you be willing to lend to himtoday?arrow_forward
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