What is the effective annual rate on the loan? (i.e., what is the interest rate once we take into account compounding?)

Q: Suppose you borrow $8500 for a term of five years at a simple interest and 8.25% APR. how much is…

A: Interest is the cost of borrowing the money.

Q: what is the interest rate

A: Interest rate is the rate at which the bank or any other lenders charges from the borrowers for…

Q: You purchase a home for $434,000 by making a down payment of 15% and financing the remaining amount…

A: First we need to use loan amortgage formula below to calculate monthly payment.  where P=Loann…

Q: You look to pay the loan back over 30 years paying 1% per month. You are taking out a mortgage for…

A: Installment is the amount of periodic payments a borrower makes to its lender in order to pay back…

Q: If you owned a property that you expect will require a new $2,500 roof at the end of five years from…

A: Kindly note that the first 2 questions cannot be solved as the information such as the loan amount…

Q: You are buying a new home, and you have negotiated a 15-year mortgage loan with a local bank for an…

A: Annuity refers to the equal amount of payment made. In this case the monthly payments for loan…

Q: Assume that you borrow $5000 and pay back the $5000 plus $250 in interest at the end of the year.…

A: Real interest rate: Principle = $5,000 Interest = $250 Interest rate =  2505,000×100%=5%

Q: Consider a home mortgage of $150,000 at a fixed APR of 6% for 25 years. a. Calculate the monthly…

A: Solution:- When an amount is borrowed, it can either be repaid as a lump sum payment or in…

Q: You borrow $175,000; the annual loan payments are $10,120.27 for 30 years. What interest rate are…

A: Interest on a loan is the additional amount of money that a borrower has to pay back to the lender…

Q: You borrow $90,000; the annual loan payments are $12,852.25 for 30 years. What interest rate are you…

A: Interest :  It is the total amount payment on loan taken or fund borrowed by any person . it may be…

Q: If a person has taken a home loan of 50000 TL with an annual effective interest rate of 12% and his…

A: A home loan is taken in order to finance the purchase of a house. The borrower makes regular…

Q: What is the monthly payment amount on a $100,000 home loan if the rate is 6.0% APR, and the loan is…

A: Present Value of loan (PV) = $100,000Annual Rate = 6%Monthly rate (r) = 6% / 12 = 0.5% or…

Q: Suppose that your unsubsidized Stafford loans plus accumulated interest total $ 27000 at the time…

A: Compound = monthly = 12 Present value = pv = $27,000 Interest rate = 8 / 12% Time = t = 10 * 12 =…

Q: The following loan is a simple interest amortized loan with monthly payments. $155000, 9 1/2%, 30…

A: A type of loan in which the borrower has to make a schedule for the periodic payment regarding both…

Q: If you borrow $2,200 and agree to repay the loan in five equal annual payments at an interest rate…

A: Loan means lending money by one or more individuals or organizations to other individuals or…

Q: Suppose you purchased a house 7 years ago and took out a mortgage for $400,000 with a 5.6% interest…

A: Here,

Q: You purchase a home for $438,000 by making a down payment of 15% and financing the remaining amount…

A: Monthly payment refers to the amount that is being paid every month either in the beginning or end…

Q: 1. Consider a home mortgage of ​$150,000 at a fixed APR of 4.5​% for 25 years.   a. Calculate the…

A: As per our guidelines we are supposed to answer only one question (if there are multiple questions…

Q: a) Find the monthly mortgage payment on a $170000 15-year mortgage if the interest rate on the loan…

A: . In simple words, mortgage means a home loan. When a home loan is taken from an institution then…

Q: you are taking a $100,000 mortgage loan for your business to be repaid over 5 years in equal…

A: Mortgage loan is the loan which is given by keeping something as collateral. This loan is for…

Q: The following loan is a simple interest amortized loan with monthly payments. $5000, 9%, 4 years (a)…

A: Given, The loan amount is $5,000 Rate is 9.50% Term of loan is 4 years

Q: You purchase a house for $188,938.00. You made a down payment of 20,000 and the remainder of the…

A: Mortgage amount refers to an amount that is being borrowed by the borrower from the lender at…

Q: You buy a house for $1,200,000 using a 30-year mortgage.  The annual interest rate is 3%.  Payments…

A: The equivalent annual cost is the periodic payment made towards the acquisition of an asset or…

Q: You can afford to pay $15,000 at the end of each of the next 30 years to repay a home loan. If the…

A: Present value of annuity is the current worth of future annual cash flows over a period of time at a…

Q: You have just purchased a home and taken out a $460,000 mortgage. The mortgage has a 30​-year term…

A: We buy expensive or large ticket items like a home by taking a bank loan. The loan is repaid through…

Q: 1. You have just purchased a home by borrowing $400, 000 for 30-years at a fixed APR of 3.87%. The…

A: Borrowed amount = $400,000Number of years = 30 yearsFixed APR = 3.87%Number of months in a year = 12

Q: The terms of a loan call for monthly payments for 6 years at 9.6 percent interest. If you borrow…

A: The present Value of Ordinary Annuity refers to the concept which dictates today's value of a sum of…

Q: Let’s assume that you plan to purchase a house which is selling for $350,000 today. You will make a…

A: Formulas that are used:-

Q: You have just purchased a home and taken out a $550,000 mortgage. The mortgage has a 30-year term…

A: Mortgage amount $                 5,50,000.00Mortgage tenure, years30.00Compounding…

Q: A family has a $142,293, 30-year mortgage at 6.6% compounded monthly. (A) Find the monthly payment…

A: Part (a): Calculation of monthly payment and interest paid: Answer: Monthly payment is $908.77…

Q: Suppose that your unsubsidized Stafford loans plus accumulated interest total $ 34000 at the time…

A: Loan amount (P) = $34000 Monthly interest rate (r) = 0.00625 (0.075 / 12) Monthly period (n) = 120…

Q: A borrower made a constant payment mortgage loan 8 years ago for $400,000 at 12 percent interest for…

A: “Since you have posted a question with multiple sub-parts, we will solve first three sub-parts for…

Q: What would be the sum of all the payments made (i.e., total $s paid over the 30 years, ignoring time…

A: To calculate the total amount paid over 30 years for a mortgage with a loan amount of $175,000, an…

Q: You have just purchased a home and taken out a $420,000 mortgage. The mortgage has a 30-year term…

A: MortgageA mortgage is a legal agreement in which a person borrows money from a financial institution…

Q: You took out a mortgage for $600,000. You need to pay $5,873 every month for 15 years. a. What is…

A: A mortgage is a type of loan used to purchase a home or property. The borrower agrees to pay back…

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.