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 2 years agoRelated Solutions
Left Bank has a standing rate of 7.9% (APR) for all bank loans and requires monthly...
Left Bank has a standing rate of 7.9% (APR) for all bank loans
and requires monthly payments. What is the monthly payment if a
loan is for
(a) $140,000 for 5 years
(b) $255,000 for 10 years
(c) $1,500,000 for 25 years
What is the effective annual rate of each of these loans?
The stated interest rate (or APR) that a bank charges on its home loans is 9.00%...
The stated interest rate (or APR) that a bank charges on its
home loans is 9.00% and the effective annual interest rate has been
computed as 9.38%. Based on this information, interest is most
likely being compounded on a:
Chariot Bank has begun making small loans to students. All students who get the loan receive...
Chariot Bank has begun making small loans to students. All
students who get the loan receive exactly the same amount of money.
Students pay back the loan in quarterly installments beginning 1
quarter from now. The loans are 2.5 - year loans that require the
student make 10 quarterly payments of $200 each. The $200 quarterly
payment covers the repayment of principal as well as interest.
Assume for this exercise that Chariot Bank makes 30 loans. The
loans are ranked...
There are three loan officers at farmers National Bank. All decisions on mortgage loans are made...
There are three loan officers at farmers National Bank. All
decisions on mortgage loans are made by one of these officers. The
president of the bank would like to be sure that the rejection rate
is about the same for the three officers. A sample of 200 recent
applications yielded the following results. Is the rejection rate
related to the officer that processes the loan? Use the 0.05
significance level.
Loan Officer
Felix
Otis
Foxburrow
Approved
50
70
55...
You are the loan officer at the local bank. A customer in good standing seeks to...
You are the loan officer at the local bank. A customer in good
standing seeks to borrow money to start a business. The customer
informs you that they will be able to repay the bank a lump sum of
$45,000 in 3 years. What is the most you would be willing to lend
this customer if the required interest rate is 15%? Assume interest
compounds annually.
Waylon & Willie Bank of Luckenbach quotes an APR of 13.76% on its small business loans...
Waylon & Willie Bank of Luckenbach quotes an APR of 13.76%
on its small business loans up to $100,000 in principal. The bank
calculates interest monthly on these loans and adds it to the
principal outstanding. The loan (principal and accumulated
interest) does not need to be repaid until maturity.
Suppose that you would like to borrow $21,307 for a period of 5
years for your small business. What will your business owe at
maturity of the loan?
Enter your...
ABC Savings and Loan provides five kinds of loans. These loans, with the yearly interest rate...
ABC Savings and Loan provides five kinds of loans. These loans,
with the yearly interest rate charged to customers, are shown in
the table below:
Type of Loan Interest charge (%)
Commercial loans 15
First mortgage 10
Home improvements 13
Second mortgage 14
Short-term revolving loan 18
Currently ABC has $53 million available to provide loans to
customers. ABC does not need to use all the money for customer
loans. Any money left can be invested in an investment X...
Pittsburg Savings & Loan makes four kinds of loans. These loans, with the yearly interest rate...
Pittsburg Savings & Loan makes
four kinds of loans. These loans, with the yearly interest rate
charged to customers, are shown in the table below.
Type of
Loan
Interest Charged (%, percent)
Commercial
Loans
8
Home
Mortgages
4
Home
Improvements
6
Short-term revolving
loans
10
The bank has $25 million in available
funds. Its objective is to maximize yield on investment. The demand
for short-term revolving loans never exceeds $10 million. Also
there are policies and regulations...
You are considering two possible fixed-rate level payment loans, Loan A and Loan B. Loan A...
You are considering two possible fixed-rate level payment loans,
Loan A and Loan B. Loan A has the following information: loan
amount is $300,000, 6.6% contract rate, 30 year maturity with
monthly payments, it has a 1.5% upfront fee and a mortgage
insurance fee of 1%. Loan B has the following information: loan
amount is $300,000, 6.35% contract rate, 30 year maturity with
monthly payments, it has a 4% upfront fee and a mortgage insurance
fee of 1%. Calculate the...
A bank just approved your small business loan for $20,000. The loan has an interest rate...
A bank just approved your small business loan for $20,000. The
loan has an interest rate of 8.0% and will be repaid with 10
end-of-year payments. What is the required annual loan payment?
Halfway through the loan's life, what is the loan’s remaining
balance?
What percentage of the total payments made during the first five
years will be made toward interest?
ADVERTISEMENT
ADVERTISEMENT
Latest Questions
- Please take time to view the video, “Was America Founded to Be Secular? “ as a...
- 7. A health psychologist knew that corporate executives in general have an average score of 80...
- Submission Guidelines This assignment may be submitted for full credit until Friday, October 4th at 11:59pm....
- Cara Ryder managers a ski school in a large resort and is trying to develop a...
- 1. Like most senses, the neurons that carry that carry the somatic sensations [touch, vibration, two-point...
- Explain how the Court has at times allowed the restriction of the civil rights of minority...
- 1. How do psychoanalytic and behavioral interpretations of childhood experience differ? 2. How does selective attention...
ADVERTISEMENT