Question

In: Finance

Ron's Loan: Ron borrows $3,000,000 to purchase a warehouse. The annual interest rate on the loan...

Ron's Loan: Ron borrows $3,000,000 to purchase a warehouse. The annual interest rate on the loan is 8.25 percent, and the term of the loan is 15 years.

Suppose Ron refinances the loan at the end of month 48 at the then prevailing interest rate of 8%. Rather than reducing his monthly payment, however, Ron decides to continue making the same monthly payments. How many months must Ron continue to make the payments on this new loan? (Round your answer to two decimal places. For example, if you think the answer is 34.578 months, enter 34.58.)

Hint: use the NPER function in Excel

Solutions

Expert Solution

Answer is 129.55 months

Formulae

jeff jeffy answered 2 years ago
Next > < Previous

Related Solutions

Ron's Loan: Ron borrows $3,000,000 to purchase a warehouse. The annual interest rate on the loan...
Ron's Loan: Ron borrows $3,000,000 to purchase a warehouse. The annual interest rate on the loan is 8.25 percent, and the term of the loan is 15 years. How much principal will Ron pay in month 37? Enter your answer rounded to the nearest penny with no punctuation, but do not use the rounded intermediate results in future calculations involving Ron's Loan (keep all available decimals).
Ron's Loan: Ron borrows $3,000,000 to purchase a warehouse. The annual interest rate on the loan...
Ron's Loan: Ron borrows $3,000,000 to purchase a warehouse. The annual interest rate on the loan is 8.25 percent, and the term of the loan is 15 years. The loan requires the borrower to pay two discount points at the time of origination. A) What is the monthly payment necessary to amortize this loan? B) What is the balance on the loan at the end of month 36? C) How much interest will Ron pay in month 37?    D) How...
Andrew borrows $2,500,000 to purchase a warehouse.  The annual interest rate on the loan is 7.25%, and...
Andrew borrows $2,500,000 to purchase a warehouse.  The annual interest rate on the loan is 7.25%, and the term of the loan is 15 years.  Answer the following questions about this loan: What is the monthly payment necessary to amortize this loan? What is the balance on the loan at the end of month 36? How much interest will Andrew pay in month 37? How much principal will Andrew pay in month 37? How much principal will Andrew pay in the fourth...
Roberto borrows $10,000 and repays the loan with three equal annual payments. The interest rate for...
Roberto borrows $10,000 and repays the loan with three equal annual payments. The interest rate for the first year of the loan is 4% compounded annually; for the second year of the loan the interest rate is 5% compounded annually; for the third year of the loan the interest rate is 6% compounded annually. a. Determine the size of the equal annual payments. b. Would interchanging the interest rates for first year and third year change the answer to part...
Bob borrows 540,000 at annual effective interest rate 3%. She repays this loan by paying off...
Bob borrows 540,000 at annual effective interest rate 3%. She repays this loan by paying off only the interest due at the end of each year to the lender and depositing a level amount Q at the end of each year into a sinking fund account paying 6% APY. The goal is to accumulate the full balance of the loan amount in the sinking fund at the end of 10 years. a. Find the level sinking fund deposit. b. What...
On January 1, Matthew borrows $6300 with a fixed interest rate on the loan of 10%...
On January 1, Matthew borrows $6300 with a fixed interest rate on the loan of 10% and a loan term of 2 years. He will be making monthly payments of $290.71. How much of Matthew’s fifth loan payment would be interest charged?(Round answers to 2 decimal places, e.g. 52.75.) $44.46 $42.41 $46.49 $48.51 On January 1, Steven borrows $5700 with a fixed interest rate on the loan of 10% and a loan term of 2 years. He will be making...
Sherry borrows $10,000 to purchase a car. The loan contract specified a rate of 6%, compounded...
Sherry borrows $10,000 to purchase a car. The loan contract specified a rate of 6%, compounded monthly. The amortization period was set at 8 years, with payments made monthly. What would be Sherry’s loan balance after 15 months? $1,904 $5,621 $8,029 $8,735 The answer is $8,735, but I would like to know the steps to get the answer.
1. An entrepreneur borrows $275,000 today. The interest rate is 8%. Finally, the loan needs to...
1. An entrepreneur borrows $275,000 today. The interest rate is 8%. Finally, the loan needs to be paid off in equal annual installments over the next 12 years, starting one year from today. How much will the entrepreneur have to pay each year? a. 22917 b. 22000 c. 36491 d. 44917 2. Suppose that you just turned 30 and that you would like $6 million at age 70 to fund your retirement. You would like to save each year an...
Tom borrows $100 at annual effective interest rate of 4% and agrees to repay it with...
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...
Most banks will charge a ___ interest rate on a $160,000 purchase loan with $200,000 purchase...
Most banks will charge a ___ interest rate on a $160,000 purchase loan with $200,000 purchase price and appraised value than on a $160,000 refinance loan remaining principle on old loan $120,000, with $200,000 appraised value A. Lower B. Higher
ADVERTISEMENT
Subjects
ADVERTISEMENT
Latest Questions
ADVERTISEMENT