You just borrowed $500,000 using a 30 year home loan that's interest-only for the first 3 years, and principal and interest (P&I) for the remaining 27 years. The interest rate is 3.72% pa compounding monthly which is not expected to change. Which of the following statements is NOT correct? a. The effective monthly rate is 0.0031 per month, given as a decimal. If the interest rate rises, the IO and P&I monthly payments will rise. b. If the IO term was one year longer so the P&I term was one year shorter, then

You just borrowed $500,000 using a 30 year home loan that's interest-only for the first 3 years, and principal and interest (P&I) for the remaining 27 years. The interest rate is 3.72% pa compounding monthly which is not expected to change. Which of the following statements is NOT correct? a. The effective monthly rate is 0.0031 per month, given as a decimal. If the interest rate rises, the IO and P&I monthly payments will rise. b. If the IO term was one year longer so the P&I term was one year shorter, then

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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You've borrowed $6,903.71 and agreed to pay back the loan with monthly payments of $270. Assume the interest rate is 15% stated as an APR. a. How long will it take you to pay back the loan? Note: Do not round intermediate calculations. Round your answer to the nearest whole number. Number of months b. What is the effective annual rate on the loan? Note: Do not round intermediate calculations. Enter your answer as a percent rounded to 2 decimal places. Effective annual rate %
If you borrow $4,600 at $850 interest for one year, what is your effective interest rate for the following payment plans? (Input your answers as a percent rounded to 2 decimal places.) X Answer is complete but not entirely correct. a. b. Annual payment Semiannual payments C. Quarterly payments d. Monthly payments Effective Rate of Interest 18.48 % 19.33 X % 19.80 X % 20.13 X %
The loan below was paid in full before its due date: (a). Obtain the value of h from the annual percentage rate table. Then (b) use the actuarial method to find the amount of unearned interest, and (c) find the payoff amount. Regular Monthly Payment $494.14 APR 4.0% Remaining Number of Scheduled Payments after Payo!! 12 Click the icon to view the annual percentage rate table. (b) The unearned interest is (Round to the nearest cent as needed) (c) The payoff amount is $(Round to the nearest cent as needed)
If you borrow $9000 at an annual percentage rate (APR) of r (as a decimal) from a bank, and if you wish to pay off the loan in 3 years, then your monthly payment M (in dollars) can be calculated using: M = 9000 (er/12-1) / 1 - e-3r 1) Describe what M (0.035) would represent in terms of the loan, APR, and time. 2) If you are only able to afford a max monthly payment of $300, describe how you could use the above formula to figure out what the highest interest rate the bank could offer you and you would still be able to afford the monthly payments. In addition, determine the maximum interest rate that you could afford.
You have taken out a loan of $11,000.00 for 4 years at an APR of 4.6% (loans are always compounded and paid back monthly). Fill in the table below showing the first lines of the Armotization Table for this loan rounding all answers to the closest cent (i.e. to 2 decimal places): Payment number Payment amount Principal Amount Interest Balance 0) $11,000.00 1) $ $ $ 2) same as above $ $ 3) same as above $ $ Submit Question
In one instance, a financial institution loaned you $90,000 for two years at an APR of 3.75% for which you must make monthly payments. In a second instance, you loaned a financial institution $90,000 for two years at an APR of 3.75% compounded monthly. What is the difference in the amount of interest paid? (Round your answer to the nearest cent.)$
If $6,840.00 is loaned for 4 months at an annual simple interest rate of 3.5%, how much interest is earned? (Note: Your answer should include a dollar sign and be accurate to two decimal places)
Flat Rock Inc recently borrowed $55,000 from its bank at a simple interest rate of 9.2%. The loan is for one year and the loan agreement calls for the interest to be added to the amount borrowed and the total amount ot be repaid in monthly installments. (a) what are the loans monthly payments? (b) compute th loans APR and rEAR.
The loan below was paid in full before its due date. (a) Obtain the value of h from the annual percentage rate table. Then (b) use the actuarial method to find the amount of unearned interest, and (c) find the payoff amount. Regular Monthly Payment $414.84 APR 4.0% Remaining Number of Scheduled Payments after Payoff 18 Click the icon to view the annual percentage rate table. ... (a) h= $3.20 (b) The unearned interest is $ (Round to the nearest cent as needed.)
The bank states they will charge you annual interest of 20% APR and interest is calculated (compounded) daily. Assume 365 days in a year. A) What is the daily interest charge? 20%/365? .055% B) What is the effective annual interest rate? (1+(20%/365))^365-1? 22.23% C) What is the simple interest over 2 years? And what is the effective interest over 2 years? Simple interest- 20%x2= 40% Effective interest- (1+(20%/365))^720-1= 48.35% Did I go about these correctly?
4) You borrow $2500 on September 3rd this year. Your demand loan carries an interest rate of 7.46%. You make partial payments of $500 on October 15th and $1575 on November 17th, You want to make a final payment of the remaining outstanding balance on November 30tn. What is the size of your final payment? Use the declining balance method. A) $450.02 B) $399.76 C) $612.84 D) $851.11 E) $449
$2350 was borrowed 4-years ago, is to be settled by following payments: $1175 today, $1030 in 7-months from now, and a final payment in 19-months from now. What is the BALANCE(amount owing) of the loan BEFORE the following payments if the interest rate on the loan is 14% compounded monthly? Today in 7 months in 19 months $ $ $ (Round All Answers to 2 Decimals)

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