Adam is loaning $5000 to Bert for a period of 2 years. Suppose Bert will repay...

Adam is loaning $5000 to Bert for a period of 2 years. Suppose Bert will repay the loan with a $5000 balloon payment at the end of the 2 years and will pay monthly interest payments each month which will end the month before the $5000 balloon payment. e. If interest is 6% effective interest, how much will Bert’s interest payments be to Adam each month? f. If Adam takes the payments he receives each month from Bert and reinvests them at 3% annual interest compounded monthly, how much will he have in his savings account at the time that Bert pays the balloon payment? g. What is Adam’s rate of return on his initial investment of $5000? That is find the yield rate as an effective interest rate.

Expert Solution

Adam is loaning $5000 to Bert for a period of 2 years. Suppose Bert will repay the loan with a $5000 balloon payment at the end of the 2 years and will pay monthly interest payments each month which will end the month before the $5000 balloon payment.

Colby Messinger answered 2 years ago

Bert and Bertha estimate when they retire in 18 years that theirretirement portfolio will need...

Bert and Bertha estimate when they retire in 18 years that their retirement portfolio will need to have a value of $2,000,000 to finance their desired retirement lifestyle. They believe inflation will average 2% over time and their retirement investment return will average 8% until they retire. After they retire, they will invest more conservatively and the portfolio will average a 5% return during a 25 year retirement. If they currently have nothing saved for retirement, how much will they...

If I saved $5000 for 10 years at a 2% rate. And add $2500 per year...

If I saved $5000 for 10 years at a 2% rate. And add $2500 per year to the original savings over the same 10 years. How much would I have in 10 years.

Adam is an architect who has worked for Garfield=s company for the last six years. Adam...

Adam is an architect who has worked for Garfield=s company for the last six years. Adam earns $2,000.00 per week, but has a general bad working relationship with his employer, Garfield. Because of that bad relationship, Garfield has been awaiting an opportunity to terminate Adam. Last week Adam was thirty minutes late for work, three mornings in a row. That, and an error on a file that Adam made last week that cost his employer $4,000.00 resulted in Garfield firing...

suppose that Ramos contributes $5000/year into a traditional IRA earning interest at the rate of 2%/year...

suppose that Ramos contributes $5000/year into a traditional IRA earning interest at the rate of 2%/year compounded annually, every year after age 37 until his retirement at age 67. At the same time, his wife Vanessa deposits $3500/year (the amount after paying taxes at the rate of 30%) into a Roth IRA earning interest at the same rate as that of Ramos. Suppose that Ramos withdraws his investment upon retirement at age 67 and that his investment is then taxed...

Equal annual instalments required to repay a loan in 3 years.

A sum of Rs.6000 is borrowed at 10% pa compounded interest and paid back in three equal annual instalments. What is the approximate amount of each instalment?

2 examples of moral hazard and adverse selection. except: Insurance, dating, hiring, loaning money.

Suppose prices in period one (base period) are (1, 2) and the consumer chooses (5.00, 6.00)....

Suppose prices in period one (base period) are (1, 2) and the consumer chooses (5.00, 6.00). In period two (current period), prices are (3.00, 4.00) and the consumer updates his optimal consumption bundle and chooses (2, 2). The Paasche price index of prices in period two relative to period one is _____ . (Round to two decimal places if necessary.)

Suppose there are only two time periods, today (period 1) and tomorrow (period 2), and only...

Suppose there are only two time periods, today (period 1) and tomorrow (period 2), and only one consumption good, let’s call it food. Assume that food is a perfectly divisible good. Let c1 and c2 denote the amount of food consumed today and tomorrow, respectively. Note that here we use subscripts to denote time periods. But you should think of food today and food tomorrow as two different commodities. The price of food today is equal to p1 = P....

Q . A company is maufacturing 5000 units for the period. Actual and standard direct materials...

Q . A company is maufacturing 5000 units for the period. Actual and standard direct materials information are: - Standard Costs: 1.5 pounds per unit; purchase price is 0.78 per pound. Actual Costs: 8000 pounds purchased and used; purchase price is 0.75 per pound. Find material price variance. Also tell if it's favourable or unfavourable. Q. A company is maufacturing 5000 units for the period. Actual and standard direct materials information are: - Standard Costs: 1.5 pounds per unit; purchase...

1. Suppose that you will receive annual payments of $27,400 for a period of 20 years....

1. Suppose that you will receive annual payments of $27,400 for a period of 20 years. The first payment will be made 6 years from now. If the interest rate is 8.00%, what is the value of the annuity in year 5, what is the current value of this stream of cash flows? (Do not round intermediate calculations. Round your answer to 2 decimal places.) a) Value of security in year 5? b) Value of security today? 2. The...

Question