ZuoTi.Pro
Question

9. (a) Assume that you have borrowed $1,000 for 2 years and you have an annual interest rate of 12% (annually compounded). Wh
business   finance   
0 0
Add a comment Improve this question Transcribed image text
Next > < Previous
Sort answers by oldest

Homework Answers

Answer #1

Given that the borrowed amount or present value is $1000
Annual interest rate is 12%
To calculate the monthly payment, we need to divide the interest rate by 12.
The interest rate we need to use is 12%/12=1%
Time period is 2 years
When we are calculating the monthly payments, the number of periods for 2 years will be 2*12=24
As the borrowed amount will be repaid completely, the future value will be $0
We can determine the monthly payments using excel.

1000 1% 1 Present value 2 Future value 3 Interest rate 4 Number of periods 5 Payments 6 Formula used: ($47.07) PMT(B3,B4,B1,B
Answer: Hence, the monthly payment should be $47.07

0 0
Add a comment
Know the answer?
Add Answer to:
9. (a) Assume that you have borrowed $1,000 for 2 years and you have an annual...
Your Answer:

Post as a guest

Your Name:

What's your source?

Earn Coins

Coins can be redeemed for fabulous gifts.

Log In

Sign Up

Not the answer you're looking for? Ask your own homework help question. Our experts will answer your question WITHIN MINUTES for Free.
Similar Homework Help Questions

  • 9. (a) Assume that you have borrowed $1,000 for 2 years and you have an annual...

    9. (a) Assume that you have borrowed $1,000 for 2 years and you have an annual interest rate of 12% (annually compounded). What is the monthly payment due on the loan? (b) Switch gears here and now assume that the payments are made annually. What is the annual interest expense for the borrower, and the annual interest income for the lender, during Year 12 (Hint: Go to the TVM lecture notes for multiple cash flows and go to slide 15.)

  • (a) Assume that you have borrowed $1,000 for 2 years and you have an annual interest...

    (a) Assume that you have borrowed $1,000 for 2 years and you have an annual interest rate of 12% (annually compounded). What is the monthly payment due on the loan? (1 point) (b) Switch gears here and now assume that the payments are made annually. What is the annual interest expense for the borrower, and the annual interest income for the lender, during Year 1? (Hint: Go to the TVM lecture notes for multiple cash flows and go to slide...

  • Please answer both parts to question 9 especially part b. And please show work :) 9....

    Please answer both parts to question 9 especially part b. And please show work :) 9. (a) Assume that you have borrowed $1.000 for 2 years and you have an annual interest rate of 12% (annually compounded). What is the monthly payment due on the loan? (1 point) (b) Switch gears here and now assume that the payments are made annually. What is the annual interest expense for the borrower, and the annual interest income for the lender, during Year...

  • show all work compounding effect will result in a higher future value with more frequent compounding...

    show all work compounding effect will result in a higher future value with more frequent compounding 9. (a) Assume that you have borrowed $1,000 for 2 years and you have an annual interest rate of 12% (annually compounded). What is the monthly payment due on the loan? (1 point) (b) Switch gears here and now assume that the payments are made annually. What is the annual interest expense for the borrower, and the annual interest income for the lender, during...

  • Assume you have a liability with three required payments: $3,000 due in 1 year; $2,000 due in 2 years; and $1,000 due in...

    Assume you have a liability with three required payments: $3,000 due in 1 year; $2,000 due in 2 years; and $1,000 due in 3 years. (a) What is the Macaulay duration of this liability at a 20% (annually compounded) rate of interest? (b) What about at a 5% (annually compounded) rate of interest?

  • Question 5 Ten years ago you borrowed $258000. The term of the loan was 23 years...

    Question 5 Ten years ago you borrowed $258000. The term of the loan was 23 years and required monthly payments of $2756.90. The interest rate on the loan was 12 percent compounded monthly. You have just made the 138th payment. What is the principal outstanding? $190069.34 $171546.34 $129000.00 $205855.27

  • 2. A 3 -month $25,000 treasury bill with a simple annual discount rate of 0.24% was...

    2. A 3 -month $25,000 treasury bill with a simple annual discount rate of 0.24% was sold in 2016. Assume 365 days in a year. (a) Find the price of the treasury bill  (T-bill). (b) Find the actual interest rate paid by the Treasury. 3.Find the compound amount for the deposit and the amount of interest earned $19,000 at 3% compounded monthly for 18 years. The compound amount after 18 years is $____ 4.Find the interest rate for a $6000 deposit...

  • 1. Assume that it takes 11.5 years for $1,000 to accumulate to $3,000 if you earn...

    1. Assume that it takes 11.5 years for $1,000 to accumulate to $3,000 if you earn 10% per year. What will happen to the length of time needed for $1,000 to accumulate to $3,000 if the interest rate increases? A. Stay the same? B. Impossible to determine C. Increase D. Decrease 2. Assume that it takes an investment of $3,507 today to accumulate to $5,000 in 3 years when the interest rate is 12% per year compounded quarterly. How much...

  • 25. You have an outstanding loan with an EAR of 10.5 percent. What is the APR...

    25. You have an outstanding loan with an EAR of 10.5 percent. What is the APR if interest is compounded monthly? 26. Curtis Builders is borrowing $150,000 today for 5 years. The loan is an interest-only loan with an APR of 9.5 percent. Payments are to be made annually. What is the amount of the first annual payment? 27. What is the future value of a lump sum of $100,000 invested for 6 years at an annual return of 4.0%...

  • need help thanks! Suppose that you have just borrowed $250,000 in the form of a 30...

    need help thanks! Suppose that you have just borrowed $250,000 in the form of a 30 year mortgage. The loan has an annual interest rate of 9% with monthly payments and monthly compounding. a. What will your monthly payment be for this loan? b. What will the balance on this loan be at the end of the 12th year? How much interest will you pay in the 7th year of this loan? d. How much of the 248th payment will...

ADVERTISEMENT
Free Homework Help App
Download From Google Play
Scan Your Homework
to Get Instant Free Answers
Need Online Homework Help?
Ask a Question
Get Answers For Free
Most questions answered within 3 hours.
ADVERTISEMENT
ADVERTISEMENT
ADVERTISEMENT