Question

In: Accounting

Interest rate/ compound interest Q1: Samantha borrowed $10,000 at a prime of 2% on March 29....

Interest rate/ compound interest

Q1: Samantha borrowed $10,000 at a prime of 2% on March 29. She agreed to payments of $2,000 on the first day of each month beginning May 1. The prime rate was 4% when Samantha took out the loan. Construct a full repayment schedule showing details of the allocation of each payment to interest and principal. What is the final payment?                             

Q2: Mr. Barrow have loan payments of $400 due 95 days ago and $700 due today are to be repaid by a payment of $600 thirty days from today and the balance in 125 days. If money is worth 6% and the agreed focal date is 125 days from today, how much is Mr. Barrow’s final payment? ( 10 marks)

Solutions

Expert Solution

1.

Note - There was a typo in Q the first line should read as " Samantha borrowed $10,000 at a prime plus 2% on March 29". Thus applicable Interest rate is Prime rate +4% = 2%+4% =6%. The answer is solved based on this correction

Formula used



2

For any clarification, please comment. Kindly Up Vote

ekkarill92 answered 2 years ago
Next > < Previous

Related Solutions

Samantha borrowed $10,000 at prime + 2% on March 29. She agreed to payments of $2,000...
Samantha borrowed $10,000 at prime + 2% on March 29. She agreed to payments of $2,000 on the first day of each month beginning May 1. The prime rate was 4% when Samantha took out the loan. Construct a full repayment schedule showing details of the allocation of each payment to interest and principal. What is the final payment?   
Bob borrowed $10,000 at an effective annual rate of interest of 7%. Bob’s plan was to...
Bob borrowed $10,000 at an effective annual rate of interest of 7%. Bob’s plan was to repay the loan with equal principal repayments plus interest at the end of each year for 20 years. After the 10th payment, Bob decides to change his payment scheme and pay the outstanding balance with equal annual payments. The loan will still be repaid in 20 years. Calculate the difference between the 10th and 11th payment. Less than 174 At least 174, but less...
Joan Messineo borrowed $10,000 at a 17% annual rate of interest to be repaid over 3...
Joan Messineo borrowed $10,000 at a 17% annual rate of interest to be repaid over 3 years. The loan is amortized into three equal, annual, end-of-year payments. a. Calculate the annual, end-of-year loan payment b. Prepare a loan amortization schedule showing the interest and principal breakdown of each of the three loan payments. c. Explain why the interest portion of each payment declines with the passage of time.
Jesse borrowed $10,000 from Tony at an interest rate of 12% per year, compounded monthly. Jesse...
Jesse borrowed $10,000 from Tony at an interest rate of 12% per year, compounded monthly. Jesse convinced Tony to allow him to make monthly payments. The first payment was agreed upon to be $100 and it would be paid exactly one month after receiving the $1 0,000. Jesse promised Tony that fu ture monthly payments would increase by 1% more than the previous payment. Given Jesse’s monthly payment schedule, the number of months necessary to completely pay off the loan...
Investment analysts generally believe the interest rate on bonds is related to the prime interest rate...
Investment analysts generally believe the interest rate on bonds is related to the prime interest rate for loans. a) Use the following data to construct a scatter graph and then fit a regression line to the data. Report the regression formula and the r-squared value from the chart (right click on the data points, select Add Trend line and select Options to show these metrics). b) Do you think the bond rate can be predicted by the prime interest rate?...
Investment analysts generally believe the interest rate on bonds is related to the prime interest rate...
Investment analysts generally believe the interest rate on bonds is related to the prime interest rate for loans. Use the following data to construct a scatter graph and then fit a regression line to the data. Report the regression formula and the r-squared values from the chart (right click on the data points, select Add Trendline, and select options to show these metrics). Do you think the bond rate can be predicted by the prime interest rate? Justify your answer...
Q1: Find the effective annual rate of interest (as a %, 2 decimal places) at which...
Q1: Find the effective annual rate of interest (as a %, 2 decimal places) at which an amount of $2,000 today will accumulate to $6000 in 8 years. (Solve using excel =RATE function; Answer in percentage rounded to two decimals without the % sign e.g. 1.8891 is 1.89) Q2: Which of the following is CORRECT? When discounting an amount to be received in one years' time at a rate that is quoted as 12% compounding quarterly, we can: Select one:...
Page 337, Problems 57, 58, 59 57. Compound Interest If $10,000 is invested at an interest...
Page 337, Problems 57, 58, 59 57. Compound Interest If $10,000 is invested at an interest rate of 3% per year, compounded semiannually, find the value of the investment after the given number of years. (a) 5 years (b) 10 years (c) 15 years 58. Compound Interest If $2500 is invested at an interest rate of 2.5% per year, compounded daily, find the value of the investment after the given number of years. (a) 2 years (b) 3 years (c)...
15. The Fed directly sets a. the prime interest rate but not the federal funds rate....
15. The Fed directly sets a. the prime interest rate but not the federal funds rate. b. both the federal funds rate and the prime interest rate. c. neither the federal funds rate nor the prime interest rate. d. the discount rate and the prime interest rate. 20. Since the financial crisis of 2007-2009, borrowing at the federal funds rate a. has dropped significantly because the rate has increased. b. has replaced open-market operations as the most frequently used tool...
At a compound interest of 5% per year, the amount that $10,000 one year ago is...
At a compound interest of 5% per year, the amount that $10,000 one year ago is equivalent to now is closest to: Group of answer choices less than $8,000 between $8,000-9,000 between $9,000-10,000 greater than 10,000 None of the answers is correct
ADVERTISEMENT
Subjects
ADVERTISEMENT
Latest Questions
ADVERTISEMENT