You borrow $1,000 from the bank and agree to repay the loan over the next year in 12 equal end-of-month payments of $90. What is the effective annual interest rate on the loan?

Q: ill grant an 80 percent loan on a home with an appraised value of $328,400 at 4.75 percent annual…

A: Loans are paid by the equal monthly payments and these payments carry the payment of principal and…

Q: Assume that you can get a loan from NCB for $264,500 for three years to buy an item of your…

A: Present Value of Ordinary Annuity refers to the concept which dictates the discounted value of a sum…

Q: You borrow $11,000 from the bank at an interest rate of 6%, compounded annually. You are required to…

A: Compound interest is interest added to the principal amount of a loan or deposit, or interest on…

Q: A $5000 loan at 10% compounded annually is to be repaid by two payments three and five years from…

A: Loan amount = $5000First payment = $3000Required rate of return =9%To find: The purchase price for…

Q: You have approached your bank for a 30 year mortage loan in the sum of $2,160,000. The bank has…

A: Monthly payments refers to the periodic payment of repayment of a loan. Monthly payments includes…

Q: You to plan to borrow at 35000 at a 7.5 annual interest rate. The terms require you to authorize the…

A: To calculate the interest paid in year 2 of the loan, we can use the formula for calculating the…

Q: You plan to borrow $49,400 at a 7.3% annual interest rate. The terms require you to amortize the…

A: Yearly installments= $49400* R* (1+R)^n/((1+R)^N-1) = 49400* 7.3%* (1+7.3%)^7/((1+7.3%)^7-1) = 9262

Q: Determine the monthly payment if you take out a loan for $ 220000 with an annual interest rate of 9%…

A: Given information: Loan amount is $220,000 Annual interest rate is 9% Number of years is 15 years

Q: A person borrows 10,000 at an interest rate of 8% per year and wishes to repay the loan over a…

A: As per the given information: The amount borrowed - 10,000 Interest rate - 8% per year Loan period -…

Q: Tom is going to borrow $20000 at an interest rate of 5.25% p.a. calculated quarterly. Tom will make…

A: The interest rate that has been compounded over a certain period is the effective annual interest…

Q: You borrow $8000 to help pay your college expenses. You agree to repay the loan at the end of 6…

A: Present Value (PV) of loan = $8,000Annual interest rate = 9% or 0.09Quarterly interest rate (r) =…

Q: A bank is willing to lend $20,000 for a home improvement loan to be repaid monthly over 5 years…

A: From the question, we can identify the following variables:Principal amount (P): This is the amount…

Q: Suppose you loan $10,000 for 1 year to an individual who agrees to pay you interest at a compound…

A: Interest charged on the principal amount and the interest accrued is known as Compound Interest. It…

Q: Safewell Co obtains a discount loan at a 12 percent interest rate.  Safewell borrows $100,000 for…

A: Effective interest rate if the amount of interest rate which is charged on the principal amount…

Q: A payment of $500 is made at the end of each month for three years to a savings account. The…

A: Present value method is used to evaluate the different level of investment projects. With the help…

Q: A loan of $10200 is to be amortized with quarterly payments over five years.  The interest on the…

A: Principal Amount = p = $10,200Compound = Quarterly = 4Time = t = 5 * 4 = 20Interest rate = r = 7.5 /…

Q: Suppose that you borrow $10,000 from a bank to purchase a car. You agree with the bank to repay the…

A: Given: Particulars Amount Loan $10,000 Interest rate 16% Years 1

Q: A worker is considering a loan of $97000 over 20 years at an interest rate of 7.9% p.a. with monthly…

A: The difficulty of distributing limited resources among numerous initiatives or investments is one…

Q: To borrow $600, you are offered an add-on interest loan at 9 percent. Two loan payments are to be…

A: Given: Borrowed amount =$600Annual interest =9%   Amount to be paid =Principal + Interest=$600 +…

Q: A student loan with a simple annual interest rate of 2.5% must be paid back in ten years. A student…

A: Given data, Interest rate(r)=2.5% or 0.025 per annum Total interest(I)=P2,000 Time(t)=10 years

Q: You borrow $30,000 for 10 years to pay tuition and fees. The annual interest rate is 12 percent.…

A: To calculate the monthly payment amount we will use the below mention formula   Monthly payment =…

Q: Find the monthly house payments necessary to amortize each  loan. Then calculate the total payments…

A: Under EMI Payment, Both Principal & Interest amount are paying back to the lender over a…

Q: Find the first payment and the interest portion of the first payment.

A: 4 / 4 To find the first payment (X) and the interest portion of the first payment, we can use…

Q: A person borrows $9000 from a bank and agrees to pay it off by equal payments at the end of each…

A: > Given data:> Principal amount = $9000> Time period = 2 Years> Total number of payments…

Q: Excellent bank has offered you, a GHC 60,000 35year loan to purchase equipment in your Factory. The…

A: Interest is an amount which is charged on deposited or borrowed amount on loan period. It is a cost…

Q: You currently have a balance of $8,000 and you pay an interest rate of 12% per year on the card.…

A: Credit card  A tiny plastic card that may be used to purchase products or services without the need…

Q: How much interest would you be paying in the 75th month?

A: Amortization is the process of repaying the loan over time. In an amortizing loan, a portion of each…

Q: You invest $3,000 in a Certificate of Deposit paying an annual compound interest of 1.26% for 10…

A: Principal amount, P = $3,000  Interest rate, r = 1.26%  Number of compounding periods, n = 10    The…

Q: You plan to borrow $47,800 at an 8.5% annual interest rate. The terms require you to amortize the…

A: Loan amount (PV) = $ 47800 Interest rate (r) = 8.5% Number of annual payments (n) = 7

Q: A personal loan for $20,000 has an interest rate of 12% over 5 years with monthly payments. What is…

A: Equated Monthly Instalment(EMI) means a part of the equally divided monthly amount paid for the…

Q: Excellent bank has offered you $40,000, 30-year loan to purchase an equipment in your Factory. The…

A: A = P1+r100n Where  A = Amount P = Principal r = Rate of interest n = Number of periods

Q: Assume you take a loan of $10,000 with interest of 5%/year compounded yearly. You intend to pay it…

A: First, determine the monthly payment of the loan using the Excel PMT function where the ‘RATE’ is…

Q: Suppose a graduate student receives a non-subsidized student loan of $11,000 for each of the 4 years…

A: Non-Subsidized Student Loan per year = $11,000 Time Period of Non-Subsidized Student Loan = 4 Years…

Q: What is the principal portion of the 200th payment of a fully amortizing $250,000, 30-year fixed…

A: We can use the excell funtions that are explained below and get the answers for the above question…

Q: A finance company uses the discount method of calculating interest. The loan principal is $5,000,…

A: Future Value = Present Value * (1+r)^n

Q: You receive a 10-year subsidized student loan of $19,000 at an annual interest rate of 6.8%. What…

A: Using excel PMT function to calculate the monthly payment

Q: You currently have a balance of $9,000 and you pay an interest rate of 17% per year on the card.…

A: The outstanding balance is $9,000The interest rate is 17% per yearThe minimum payment is 3%The time…

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.