Corporate Finance (The Mcgraw-hill/Irwin Series in Finance, Insurance, and Real Estate)
11th Edition
ISBN: 9780077861759
Author: Stephen A. Ross Franco Modigliani Professor of Financial Economics Professor, Randolph W Westerfield Robert R. Dockson Deans Chair in Bus. Admin., Jeffrey Jaffe, Bradford D Jordan Professor
Publisher: McGraw-Hill Education
expand_more
expand_more
format_list_bulleted
Question
Chapter 4, Problem 56QP
Summary Introduction
To compute: The amount that should be paid to repay the loan.
It refers to the ability of the person to buy something. Purchasing power decreases with increase in inflation and increase with decrease in inflation.
Expert Solution & Answer
Want to see the full answer?
Check out a sample textbook solution
Students have asked these similar questions
On September 1, 2021, Susan Chao bought a
motorcycle for $33,000. She paid $1,000 down and
financed the balance with a five-year loan at an annual
percentage rate of 7.5 percent compounded monthly.
She started the monthly payments exactly one month
after the purchase (i.e., October 1, 2021). Two years
later, at the end of October 2023, Susan got a new job
and decided to pay off the loan. If the bank charges her
a 2 percent prepayment penalty based on the loan
balance, how much must she pay the bank on
November 1, 2023?
Mr. Owen is buying a new washer/dryer for $2459 at Home Depot. There is 7.5% sales tax added to his purchase. He plans to charge this to his Home Depot credit card, which earns 19.5% APR. He wants to pay $245 per month to the credit card. Fill in the amortization table to calculate how long it will take to pay off the loan.
Month
Balance
Interest
Amt. Applied to Principal
New Balance
1
$2441.39
2
$2441.39
3
$36.34
$208.66
$2027.40
4
$2027.40
$32.95
$212.05
$1815.35
8
$226.18
$932.11
$231.29
$3.76
----
In Aug. 2007, Irene Engels borrowed $50,000, and she borrowed another $50,000 in Aug. 2008, forEducation. Her student loan has an annual interest rate of 2% compounded monthly. Irene didn’tmake any payments on her student loan until she started a lucrative job in Sep. 2009, when she startedto make a payment of $1,000 at the end of every month. Now bonus time is coming near. For Jan.2010, she plans to make another $1,000 payment (her 5th) and also apply her bonus to the loan. Howbig must her bonus be so that she will have completely paid off the loan at the end of this Jan.?
Please solve by putting in the values using *BA II Plus Calculator. please provide values of pv & fv
Thanks
Chapter 4 Solutions
Corporate Finance (The Mcgraw-hill/Irwin Series in Finance, Insurance, and Real Estate)
Ch. 4 - Prob. 1CQCh. 4 - Prob. 2CQCh. 4 - Prob. 3CQCh. 4 - Prob. 4CQCh. 4 - Time Value On subsidized Stafford loans, a common...Ch. 4 - Prob. 6CQCh. 4 - Prob. 7CQCh. 4 - Prob. 8CQCh. 4 - Prob. 9CQCh. 4 - Prob. 10CQ
Ch. 4 - Simple Interest versus Compound Interest First...Ch. 4 - Prob. 2QPCh. 4 - Prob. 3QPCh. 4 - Prob. 4QPCh. 4 - Prob. 5QPCh. 4 - Prob. 6QPCh. 4 - Calculating Present Values Imprudential, Inc., has...Ch. 4 - Calculating Rates of Return Although appealing to...Ch. 4 - Perpetuities An investor purchasing a British...Ch. 4 - Prob. 10QPCh. 4 - Prob. 11QPCh. 4 - Prob. 12QPCh. 4 - Calculating Annuity Present Value An investment...Ch. 4 - Calculating Perpetuity Values The Perpetual Life...Ch. 4 - Calculating EAR Find the EAR in each of the...Ch. 4 - Calculating APR Find the APR, in each of the...Ch. 4 - Calculating EAR First National Bank charges 10.3...Ch. 4 - Interest Rates Well-known financial writer Andrew...Ch. 4 - Calculating Number of Periods One of your...Ch. 4 - Prob. 20QPCh. 4 - Prob. 21QPCh. 4 - Simple Interest versus Compound Interest First...Ch. 4 - Calculating Annuities You are planning to save for...Ch. 4 - Prob. 24QPCh. 4 - Prob. 25QPCh. 4 - Prob. 26QPCh. 4 - Prob. 27QPCh. 4 - Annuity Present Values What is the present value...Ch. 4 - Annuity Present Values What is the value today of...Ch. 4 - Balloon Payments Audrey Sanborn has just arranged...Ch. 4 - Prob. 31QPCh. 4 - Prob. 32QPCh. 4 - Growing Annuity Southern California Publishing...Ch. 4 - Growing Annuity Your job pays you only once a year...Ch. 4 - Prob. 35QPCh. 4 - Prob. 36QPCh. 4 - Prob. 37QPCh. 4 - Calculating Loan Payments You need a 30-year,...Ch. 4 - Prob. 39QPCh. 4 - Calculating Present Values You just won the TVM...Ch. 4 - Prob. 41QPCh. 4 - Prob. 42QPCh. 4 - Prob. 43QPCh. 4 - Prob. 44QPCh. 4 - Prob. 45QPCh. 4 - Prob. 46QPCh. 4 - Prob. 47QPCh. 4 - Prob. 48QPCh. 4 - Prob. 49QPCh. 4 - Prob. 50QPCh. 4 - Calculating Annuities Due You want to lease a set...Ch. 4 - Prob. 52QPCh. 4 - Prob. 53QPCh. 4 - Prob. 54QPCh. 4 - Prob. 55QPCh. 4 - Prob. 56QPCh. 4 - Prob. 57QPCh. 4 - Prob. 58QPCh. 4 - Prob. 59QPCh. 4 - Prob. 60QPCh. 4 - Prob. 61QPCh. 4 - Prob. 62QPCh. 4 - Prob. 63QPCh. 4 - Prob. 64QPCh. 4 - Calculating the Number of Periods Your Christmas...Ch. 4 - Prob. 66QPCh. 4 - Prob. 67QPCh. 4 - Prob. 68QPCh. 4 - Prob. 69QPCh. 4 - Perpetual Cash Flows What is the value of an...Ch. 4 - Prob. 71QPCh. 4 - Prob. 72QPCh. 4 - Prob. 73QPCh. 4 - Prob. 74QPCh. 4 - Rule or 69.3 A corollary to the Rule of 72 is the...Ch. 4 - Prob. 1MCCh. 4 - Prob. 2MCCh. 4 - Prob. 3MCCh. 4 - Prob. 4MCCh. 4 - Prob. 5MCCh. 4 - Prob. 6MC
Knowledge Booster
Similar questions
- 1. On September 1, 1998, Susan Chao bought a motorcycle for $10,000. She paid $1,000 down and financed the balance with a five-year loan at an APR of 9.6%, compounded monthly. She started the monthly payment exactly one month after the purchase, i.e., October, 1998. In the middle of October, 2000, she got a new job and decided to pay off the loan. If the bank charges her 1% prepayment penalty based on the loan balance, how much should she pay the bank on November 1, 2000? Answer.arrow_forwardQuentin Satham borrows $500,000 from a lending company in his hometown at 12% interest compounded monthly. To fulfill his obligation to repay the loan, Quentin agreed to start paying the six (6) equal monthly payments starting next month. 1. What will be the amount of his monthly amortization? 2. Construct an amortization schedule. 3. What will be the outstanding balance of his loan at the end of 4 months from today? 4. If Pedro failed to pay the 2nd and 3rd monthly amortization, how much shall be the required single payment on the fifth month to fully pay his outstanding obligation? 5. Supposed that he will still not be able pay the single total payment on the Fifth month as stated in question 4 above, and assuming further that both parties agree that the outstanding obligations shall instead be paid in 7 equal monthly installments, at 15% compounded monthly, starting on the 9th month, what will the value of such monthly installment be?arrow_forwardDominic Torreto borrows $300,000 from a lending company in his hometown at 12% interest compounded monthly. To fulfill his obligation to repay the loan, Dominic agreed to start paying the six (6) equal monthly payments starting next month. If Dominic failed to pay the 2nd and 3rd monthly amortization, how much shall be the required single payment on the fifth month to fully pay his outstanding obligation? Supposed that he will still not be able to pay the single total payment on the Fifth month as stated in question 1 above, and assuming further that both parties agree that the outstanding obligations shall instead be paid in 7 equal monthly installments, at 15% compounded monthly, starting on the 9th month, what will the value of such monthly installment be?arrow_forward
- 1. Betty Thomas borrowed $6500 onher Visa card to install a hot tub with landscaping around it. The interest charges are 1.6% per month on the unpaid balance a) Find the monthly interest charges. b) Find the interest charges if she moves the debt to a credit card charging 1% per month on the unpaid balance. (c) Find the monthly savings.arrow_forwardHeather borrowed $4700 on her credit card to purchase new furniture. Find the monthly interest charges, which are 1.8% per month on the unpaid balance. Find the interest charges if she moves the debt to a credit card charging 0.7% per month on the unpaid balance. What are the interest charges at 1.8% a month? What are the interest charges at 0.7% a month? What are the savings that using the 0.7% card brings over the 1.8% card?arrow_forwardJennifer has a 60-month fixed installment loan, with a monthly payment of $223.04. The amount she borrowed was $11,000.00 at 8.0% APR. A split second after making her 36th payment, Jennifer decided to pay off the remaining balance on the loan. What is the total amount due to pay off the balance? Use the actuarial method. If you use the Finance Charge Table 11.2, page 632, and the "unearned interest formula", page 635, in your textbook to solve this problem, the result will match exactly with one of the answers. If you use a spreadsheet to do the computation, your result will not match exactly with any of the answers, but it will differ only very little (mostly less than $1) from the "correct" answer. $4,788.06 $4,897.69 $4,931.79 $5,063.35arrow_forward
- Tim Huston purchased a wall unit for $2,200. He made a $600.00 down payment and financed the balance with an installment loan for 48 months. If Tim’s payments are $42.59 per month, use the APR formula to calculate what annual percentage rate he is paying on the loan. (Round your answer to two decimal places)arrow_forwardDonla borrowed $7,000 from her credit union on July 20 on a demand loan to buy the motorcycle. The loan terms require fixed monthly payments of $1400 on the first of each month beginning September 1st. The floating rate on the loan is prime plus 3%. The prime rate started at 5.75%, but rose 0.5% on 19 August, and another 0.25% effective 2 November. Create a loan repayment schedule presenting the amount of each payment and the allocation of each payment to interest and principalarrow_forwardETo purchase a car, Sarah took out a 60-month loan for $33,000 with a 7.6% annual interest Erate. After making 45 payments, Sarah received a bonus from work and plans to use it to pay off the remaining balance. Calculate Sarah's monthly payment and the amount needed to pay off her loan. Sarah's monthly payment is (Round to the nearest cent.) The amount needed to pay off this loan with (Round to the nearest cent.) payments remaining isarrow_forward
- Todd Gunderson is making monthly payments on a loan for a motorcycle that carries a rate of 7.5% interest. The balance on November 12 is $3,119.54 and he makes a payment of $300 on December 15. On January 10 he made a payment of $350. What is the remaining balance on this loan after making the two payments?arrow_forwardWade Ellis buys a new car for $16,127.42. He puts 10% down and obtains a simple interest amortized loan for the rest at 0.115 interest for four years. (Round your answers to the nearest cent.) (a) Find his monthly payment. (b) Find the total interest. (c) Prepare an amortization schedule for the first two months of the loan. Payment Number Principal Portion Interest Portion Total Payment Balance 0 $ _______ 1 $ _______ $ _________ $ _______ $ _______ 2 $ _______ $ _________ $ _______ $ _______arrow_forwardPolly Flynn borrowed $5,000 for 60 days at 7%. On day 20 Polly made a $2,000 partial payment ( assume ordinary interest). What is her final payment? How much did she save by making the partial payment?arrow_forward
arrow_back_ios
SEE MORE QUESTIONS
arrow_forward_ios
Recommended textbooks for you
