2. Paying back the principal. Suppose Mark has just borrowed 5,000S to purchase a desktop computer....
2. Paying back the principal. Suppose Mark has just borrowed 5,000S to purchase a desktop computer. The loan rate is 9% per year. He must pay 450$ in interest payments at the end of the first year and at the end of the second year. He can freely choose how to repay the principal on the loan that is the 5,000S he initially borrowed Assume that he decides to repay 2,500S at the end of the first year and 2,500S...
Suppose Mark has just borrowed 5,000s to purchase a desktop computer. The loan rate is 9% per year. He must pay 450$ in interest payments at the end of the first year and at the end of the second year. He can freely choose how to repay the principal on the loan that is the 5,000S he initially borrowed. Assume that he decides to repay 2,500S at the end of the first year and 2,500S at the end of the...
1) Carlos has borrowed $8,000 for 8 years at 6% compounded semi-annually. He will repay interest every 6 months plus principal at maturity. He will also deposit X every 6 months into a sinking fund paying 5% compounded semi-annually to pay off the principal at maturity. a) Find X. Carlos goes bankrupt at the end of year 6, just after making his interest payment and sinking fund deposit. The bank confiscates the money in the sinking fund but gets no...
Problem 1 (Required, 25 marks) A borrower has borrowed $2000000 from the bank. It is given that the loan charges interest at an annual effective interest rate 16.0755% and compound interest is assumed. (a) Suppose that the borrower decides to repay the loan by 180 monthly payments made at the end of every month, (i) Using retrospective method, calculate the outstanding balance at 60th repayment date. (ii) Calculate the interest due and principal repaid in 120th repayment. (b) Suppose that...
only need the second part B SECTION 5-18 Amortization 1. Suppose you borrowed $30,000 on a student loan at a rate of 8% and must repay it in 3 equal installments at the end of each of the next 3 years. How large would your payments be, how much of the first payment would represent interest, how much would be principal, and what would your ending balance be after the first year? 8% $30,000 $0 FV PMT $8,386.69 3 Loan...
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...
An amount of $15,000 is borrowed from the bank at an annual interest rate 12% h Calculate the repavment amounts if the loan ($15 000) will be repaid in two equal installments of $7.500 each, paid at the end of second and fourth years respectively. Interest will be paid each year Click the icon to view the interest and annuity table for discrete compounding when i- 12%% per year . a. The equal end-of-year payments required to pay off the...
Problem 2 Boston Healthcare has just borrowed $2,000,000 on a ten-year, annual payment term loan at a 6 percent rate. The first payment is due one year from now. Construct the amortization schedule for this loan. (See pages 273-274) Beginning Balance $2,000,000 Annual Payment Annual | Repayment of Interest (6%) | Principal Ending Balance Year BAUAN
You have just purchased a car and taken out a $49,000 loan. The loan has a five-year term with monthly payments and an APR of 5.8%. a. How much will you pay in interest, and how much will you pay in principal, during the first month, second month, and first year? (Hint: Compute the loan balance after one month, two months, and one year.) b. How much will you pay in interest, and how much will you pay in principal,...
2. You borrowed $6,000.00 for 5 years at 7% annual interest rate. The banker said that to repay the total loan amount you have to pay $1,463 at the end of each year. a) Draw a time line depicting this cash low b) Build a table to determine how much of the annual payment is interest, and 2 how much principal is there in each annual payment. 4