Suppose you borrowed $25,000 at a rate of 8.5% and must repay it in 5 equal installments at the end of each of the next 5 years. By how much would you reduce the amount you owe in the first year? a. $5,108.30 b. $5,920.99 c. $5,572.70 Od. $4,469.77 Oe. $5,804.89

8. Suppose that you want to take a five-year loan of $80,000. The interest rate is 9% per year, and the loan calls for equal annual payments. How much do you need to pay each year? A. $17,120.1 B. $19,169.4 C. $20,567.4 D. $21,333.1

You borrow X for 10 years at an annual effective interest rate of i = 6%. If you pay the loan amount and accumulated interest at the end of 10 years in one payment you would pay 356.54 more than if you made 10 level payments at the end of each year. Find X.

5. A loan of £2,000 is to be repaid over 7 years with equal annual payments at the end of each year. The interest rate is 6.5% p.a. effective. (a) Draw up the loan schedule (b) What payment makes the outstanding balance drop below £1,500? (c) What is the outstanding balance after 4 payments? After the first 4 payments the individual needs to borrow another £1,000. It is agreed that the new outstanding balance will be repaid in 4 more years with quarterly installments. The first installment is P and then they increase by £10 per quarter. (d) Find P.

4f

9. If a loan of L is repaid in one lump sum at the end of 20 years, the amount of interest paid is 5000 more than if the loan is repaid with 20 level payments at the end of each year. Assume the effective rate of interest is 7%. Find the loan amount L. Answer: 2522.93

Suppose you borrowed $20,000 at a rate of 9.2% and must repay it in 5 equal installments at the end of each of the next 5 years. How much would you still owe at the end of the first year, after you have made the first payment? O a. $16,000.00 O b. $17,106.89 Oc. $14,831.44 O d. $16,671.44 Oe. $15,266.89

Sandyhorse Corp. has $370 million of debt outstanding at an interest rate of 14 percent. What is the present value of the interest tax shield if the debt has no maturity and if Sandyhorse is subject to a 30 percent marginal tax rate? $_________