local finance company quotes a 17% interest rate on one-year loans. So, d you borrow $25.000, the interest for the year will be $4,250 Since you must repay a total of $29.250 in one year, the finance company requires you to pay $29.250/2. or $243250, per month over the next 12 months. Is this a 17% loan? What rate would legally have to be quoted? (De net reund intermediate calculations. Round the final answer to 2 decimal places) Annual percentage rate What is the effective annual rate? (De not round intermediate calculations. Round the final answer to 2 decimal places) ffective annual rate

local finance company quotes a 17% interest rate on one-year loans. So, d you borrow $25.000, the interest for the year will be $4,250 Since you must repay a total of $29.250 in one year, the finance company requires you to pay $29.250/2. or $243250, per month over the next 12 months. Is this a 17% loan? What rate would legally have to be quoted? (De net reund intermediate calculations. Round the final answer to 2 decimal places) Annual percentage rate What is the effective annual rate? (De not round intermediate calculations. Round the final answer to 2 decimal places) ffective annual rate

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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Similar questions

A house is to be purchased by financing $ 341,998 with a mortgage. A conventional 30-year loan is used at 4%. What will be the principal portion on the first monthly payment? plz show work
A house price of $100,000 can be financed with two loans below with monthly payments. The total origination cost associated with these two loans is $2,000. Loan Amount Term (years) Interest Rate 1st loan $ 80,000 30 5% 2nd loan $ 10,000 30 7% Alternatively, the borrower can borrow one loan in the amount of $90,000 with origination cost of $1,500. What should the interest rate be on the $90,000, 30 years loan with monthly payments so that the borrower will be indifferent between these two alternatives? 4.28% 5.28% 6.28% 7.28%
Suppose you take out a 36-month installment loan to finance a delivery van for $26,100. The payments are $987 per month, and the total finance charge is $9,432. After 25 months, you decide to pay off the loan. After calculating the finance charge rebate, find your loan payoff (in $). (Round your answer to the nearest cent.) 19,269.59
5) A lender is willing to provide financing at a DSCR of 1.25 at 5.0% interest with 25-year monthly amortization on a $225,000 NOI. What are my monthly payments? 6) If the lender in question 5 charges 2 points, what is my cost of financing? 7) Based on question 6, What is my cost of financing if I pay the loan off at the endof year 5? 8) What is the loan balance at the end of year 5?
Some lenders offer loans with biweekly payments rather than monthly payments. Investigate the effect of this on home loans by finding the payment and total interest on a thirty-year simple interest amortized loan of $150,000 at 13% interest. (Round your answers to the nearest cent.) (a) if payments are made monthly payment $ total interest $ (b) if payments are made biweekly payment $ total interest $
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?
You are looking at a one-year loan of $15,000. The interest rate is quoted as 10 percent plus 3 points. A point on a loan is simply 1 percent (one percentage point) of the loan amount. Quotes similar to this one are common with home mortgages. The interest rate quotation in this example requires the borrower to pay 3 points to the lender up front and repay the loan later with 10 percent interest. What rate would you actually be paying here? Multiple Choice 6.70% 10.00% 13.40% 12.06% 14.74%
A floating rate mortgage loan is made for $190,000 for a 30-year period at an initial rate of 12 percent interest. However, the borrower and lender have negotiated a monthly payment of $1,520. Required: a. What will be the loan balance at the end of year 1? b. If the interest rate increases to 13 percent at the end of year 2, how much is the payment plus negative amortization in year 2 and year 5 if the payment remains at $1,520?
4) I have an NOI of$172,400. The lender indicated that I can borrow funds at a 7.0% interest rate with a 25 year amortization and 5 year term at a 1.20 Debt Service Ratio(DCR). The lender will charge 2 points. a. What is the monthly payment? b.What is the APR (annual percentage rate) if fully amortized? C.What is the APR at the end of the loan term? d.What if I pay the loan off at the end of the second year, what is my APR? e.What if there was a prepayment penalty of 1.5% at the end of year 4, what is myAPR?
You take out a 15-year FRM for $500,000. The bank offers 5% interest rate but charges you a loan fee of 5% of the total loan amount. What is the actual cost of borrowing of this mortgage? 0.42% 0.48% 5.00% 5.79%
Go Debt Bank Limited quotes a 9 percent interest rate on loans for 1 year. You are seeking a loan of $50,000 and as such you are expected to pay $4,500 in interest for the year. The terms of the loan requires you to repaythe principal and interest at the end of year one = $54,500. Go Debt Bank Limited thus requires you to pay $54,500 over a 12 month period, or $4,541.67, per month over the next 12 months.Is this a 9 percent loan? What rate should be legally quoted? What is the effective annual rate? Show all working.
(Compound interest with nonannual periods) After examining the various personal loan rates available to you, you find that you can borrow funds from a finance company at an APR of 6 percent compounded quarterly or from a bank at an APR of 7 percent compounded monthly. Which alternative is more attractive? a. If you borrow $100 from a finance company at an APR of 6 percent compounded quarterly for 1 year, how much do you need to payoff the loan? $nothing (Round to the nearest cent.)

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