Question
In: Finance
Straight bank loan. Left Bank has a standing rate of 7.7 (APR) for all bank loans...
Straight bank loan. Left Bank has a standing rate of 7.7 (APR) for all bank loans and requires monthly payments. What is the monthly payment if a loan is for (a) $130,000 for 6 years, (b) $295,000 for 9 years, or (c) $1,300,000 for 23 years? What is the effective annual rate of each of these loans?
Solutions
Expert Solution
a) We are given the following information:
| Payment | PMT | To be calculated |
| Rate of interest | r | 7.70% |
| Number of years | n | 6.00 |
| Monthly | frequency | 12.00 |
| Loan amount | PV | 130000.00 |
We need to solve the following equation to arrive at the
required PMT
So the monthly payment is $2260.33 rounded to 2 decimal places
b) We are given the following information:
| Payment | PMT | To be calculated |
| Rate of interest | r | 7.70% |
| Number of years | n | 9.00 |
| Monthly | frequency | 12.00 |
| Loan amount | PV | 295000.00 |
We need to solve the following equation to arrive at the
required PMT
So the monthly payment is $3794.80 rounded to 2 decimal places
c) We are given the following information:
| Payment | PMT | To be calculated |
| Rate of interest | r | 7.70% |
| Number of years | n | 23.00 |
| Monthly | frequency | 12.00 |
| Loan amount | PV | 1300000.00 |
We need to solve the following equation to arrive at the
required PMT
So the monthly payment is $3794.80 rounded to 2 decimal places
jeff jeffy answered 1 year agoRelated Solutions
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