ZuoTi.Pro
Question

Larry borrows 18300 dollars from Moe at an effective rate of 9.5 percent, and agrees to...

Larry borrows 18300 dollars from Moe at an effective rate of 9.5 percent, and agrees to make 12 equal annual payments (the first a year from now) to repay the loan. Immediately after Larry makes the seventh payment, Moe sells the loan to Curly. If Moe's total yield rate is 7 percent effective, how much does Curly pay for the loan?

business   finance   
0 0
Add a comment Improve this question Transcribed image text
Next > < Previous
Sort answers by oldest

Homework Answers

Answer #1

Annual payment=loan*rate/(1-1/(1+rate)^number of payments)=18300*9.5%/(1-1/(1+9.5%)^12)=2620.335171

Curly will pay=2620.335171/7%*(1-1/(1+7%)^5)=10743.89155

0 0
Add a comment
Know the answer?
Add Answer to:
Larry borrows 18300 dollars from Moe at an effective rate of 9.5 percent, and agrees to...
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

  • Dominic borrows 7200 dollars today, and agrees to repay the loan by making annual interest payments...

    Dominic borrows 7200 dollars today, and agrees to repay the loan by making annual interest payments to the lender, and by also accumulating a sinking fund with increasing annual deposits to repay the principal. The interest rate on the loan is 8.8 percent, and the interest paid on the sinking fund is 6.7 percent, both effective. If the loan is to be settled 15 years from now, and the sinking fund deposits increase by 7 dollars per year, what is...

  • Tom borrows $100 at annual effective interest rate of 4% and agrees to repay it with 30 annual installments. The amount...

    Tom borrows $100 at annual effective interest rate of 4% and agrees to repay it with 30 annual installments. The amount of each payment in the last 20years is set at twice that in the first 10 years. At the end of 10 years, Tom has the option to repay the entire loan with a final payment $X, in addition to the regular payment. This will yield the lender an annual effective rate of 4.5% over the 10-year period. Calculate...

  • Exercise: · A borrows $10.000 from B and agrees to repay it with equal quarterly installment...

    Exercise: · A borrows $10.000 from B and agrees to repay it with equal quarterly installment of principle and interest at 8%. convertible quarterly over six years, At the end of two years B sells the right to receive future payments to Cat a price, which produces a yield rate of 10% convertible quarterly for C Find the total amount of interest received: (1) by C. and (2) by

  • Question 4 Not yet answered 4. Frances borrows $10,000 and agrees to make 20 equal annual...

    Question 4 Not yet answered 4. Frances borrows $10,000 and agrees to make 20 equal annual payments toward principal, where the first payment is due in one year. In addition to the principal repayments, each year she will pay interest at 12% effective on the outstanding principal. The lender wishes to sell the loan to an investor immediately after the loan is made. Determine the sale price such that the investor will achieve a yield of 15% on this investment....

  • Barbara borrows $3000. She agrees to make monthly interest payments on the loan and will build...

    Barbara borrows $3000. She agrees to make monthly interest payments on the loan and will build up a sinking fund with monthly deposits to repay the principal with a single payment 19 months from now. If the interest being charged on the loan is j12 = 8.5% and the interest being earned on the sinking fund is j12 = 5.4%, what is the monthly cost of the debt for Barbara?

  • Barbara borrows $3500. She agrees to make monthly interest payments on the loan and will build...

    Barbara borrows $3500. She agrees to make monthly interest payments on the loan and will build up a sinking fund with monthly deposits to repay the principal with a single payment 21 months from now. If the interest being charged on the loan is j12 = 8% and the interest being earned on the sinking fund is j12= 5.2%, what is the monthly cost of the debt for Barbara? I got 182.95 but is wrong. please help

  • 4. On 1/1/87, Cathy borrows $1,000 from ABS Finance Company and agrees to pay it back...

    4. On 1/1/87, Cathy borrows $1,000 from ABS Finance Company and agrees to pay it back in five annual installments at an annual effective rate of 11%. The first payment is due one year after the loan is issued. On 1/1/89 Cathy pays off the balance of the loan plus a $50 prepayment penalty. Find ABC's effective overall yield rate i. Select one: a. 12.8% <i< 13.0% O b. 13.4% <i O c. 13.0% <i< 13.2% d. 13.2% < i...

  • Luke borrows $800 000 from a bank to set up a medical practice. He agrees to...

    Luke borrows $800 000 from a bank to set up a medical practice. He agrees to pay a fixed interest rate of 10.2 per cent per annum (calculated monthly) and to repay by equal monthly instalments over 10 years. Calculate the monthly repayment. By how much does Luke’s first repayment reduce the principal? If the loan is paid off as planned, by how much will the last repayment reduce the principal?

  • Omar just took out a loan from the bank for 142,894 dollars. He plans to repay...

    Omar just took out a loan from the bank for 142,894 dollars. He plans to repay this loan by making a special payment to the bank of 26,888 dollars in 3 months and by also making equal, regular monthly payments of X. If the interest rate on the loan is 0.8 percent per month, he makes his first regular monthly payment later today, and he makes his last regular monthly payment made in 7 months from today, then what is...

  • Jens just took out a loan from the bank for 59,516 dollars. He plans to repay...

    Jens just took out a loan from the bank for 59,516 dollars. He plans to repay this loan by making a special payment to the bank of 5,460 dollars in 3 years and by also making equal, regular annual payments of X for 7 years. If the interest rate on the loan is 11.84 percent per year and he makes his first regular annual payment in 1 year, then what is X, Jens’s regular annual payment?

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