Question

In: Finance

You have just borrowed $160,000 to buy a condo. You will repay the loan in equal...

You have just borrowed $160,000 to buy a condo. You will repay the loan in equal monthly payments of $1,287.40 over the next 30 years. a-1. What monthly interest rate are you paying on the loan? (Do not round intermediate calculations. Enter your answer as a percent rounded to 2 decimal places.) a-2. What is the APR? (Do not round intermediate calculations. Enter your answer as a whole percent.) b. What is the effective annual rate on that loan? (Do not round intermediate calculations. Enter your answer as a percent rounded to 2 decimal places.) c. What rate is the lender more likely to quote on the loan?

Expert Solution

PV = 160000

N = 30*12 = 360

PMT = 1287.40

R = ?

Using excel function, R = Rate(N,PMT,PV)

Rate(360,1287.40,-160000) = 0.0075

Monthly interest rate = 0.0075 = 0.75%

a-2

APR = 0.0075*12 = 0.09 = 9%

b.

EAR = [1+i/m]^m - 1

i - nominal rate

m - no. of compounding periods per year

EAR = (1+ 0.09/12)^12 - 1 = 0.0938 = 9.38%

c. Lender will quote the loan at 9% per anum

jeff jeffy answered 2 years ago

You have just borrowed $300,000 to buy a condo. You will repay the loan in equal...

You have just borrowed $300,000 to buy a condo. You will repay the loan in equal monthly payments of $3,950.37 over the next 20 years. a-1. What monthly interest rate are you paying on the loan? (Do not round intermediate calculations. Enter your answer as a percent rounded to 2 decimal places.) a-2. What is the APR? (Do not round intermediate calculations. Enter your answer as a whole percent.) b. What is the effective annual rate on that loan? (Do...

You have just borrowed $100,000 to buy a condo. You will repay the loan in equal...

You have just borrowed $100,000 to buy a condo. You will repay the loan in equal monthly payments of $804.62 over the next 30 years. a. What monthly interest rate are you paying on the loan?' b. What is the APR? c. What is the effective annual rate on that loan? d. What rate is the lender more likely to quote on the loan?

You have just borrowed $200,000 to buy a condo. You will repay the loan in equal...

You have just borrowed $200,000 to buy a condo. You will repay the loan in equal monthly payments of $2,106.45 over the next 25 years. a-1. What monthly interest rate are you paying on the loan? (Do not round intermediate calculations. Enter your answer as a percent rounded to 2 decimal places.) Monthly interest rate % a-2. What is the APR? (Do not round intermediate calculations. Enter your answer as a whole percent.) APR% b. What is the effective annual...

Celeste just borrowed 47,700 dollars. She plans to repay this loan by making equal quarterly payments...

Celeste just borrowed 47,700 dollars. She plans to repay this loan by making equal quarterly payments of 2,271.5 dollars for 27 quarters. If she makes her first quarterly payment later today, then what is the quarterly interest rate on the loan? Answer as a rate in decimal format so that 12.34% would be entered as .1234 and 0.98% would be entered as .0098.

You have borrowed 15,000 and agreed to repay the loan with 5 annual level payments of...

You have borrowed 15,000 and agreed to repay the loan with 5 annual level payments of 4000, with the ﬁrst payment occurring one year from today. What annual interest rate are you paying?

You just borrowed $50,000 to buy a car. You will pay back this loan with monthly...

You just borrowed $50,000 to buy a car. You will pay back this loan with monthly payments of $1,610 for 4 years. What is the APR (annual percentage rate) on this loan? What is the effective annual rate associated with an 8% nominal annual rate (r = 0.08) when interest is compounded (1) annually: (2) semiannually: (3) quarterly: (4)monthly: You negotiate a great deal and your bank agrees to lend you money for 30 years at 4% APR (annual percentage...

Sunrise Coffee just borrowed $160,000 to build a new shop. The mortgage loan is for 25...

Sunrise Coffee just borrowed $160,000 to build a new shop. The mortgage loan is for 25 years at an APR of 8.45% with equal monthly payments. How much interest will be paid during the final 4 years?

Sub-Cinema Inc. borrowed $10,000 on Jan. 1 and will repay the loan with 12 equal payments...

Sub-Cinema Inc. borrowed $10,000 on Jan. 1 and will repay the loan with 12 equal payments made at the end of the month for 12 months. The interest rate is 12% annually. If the monthly payments are $888.49, what is the journal entry to record the cash received on Jan. 1 and the first payment made on Jan. 31?

Mr. Lamb borrowed $85,000 at 11.40% compounded monthly. He agreed to repay the loan in equal...

Mr. Lamb borrowed $85,000 at 11.40% compounded monthly. He agreed to repay the loan in equal monthly payments over 15 years. What is the size of the monthly payment rounded up to nearest cent? How much of the 24th payment is interest? How much of the 137th payment goes towards principal? How much principal was paid down in the third year? Now assume that in part (a) you had rounded the payments down to the nearest dollar, what would be...

John borrowed $84,000 at 9.60% compounded monthly. He agreed to repay the loan in equal monthly...

John borrowed $84,000 at 9.60% compounded monthly. He agreed to repay the loan in equal monthly payments over a 15 year amortization term. (a) What is the size of the monthly payment?t Enter answer to 2 decimal places b) Now assume that in part (a) you had rounded the payments DOWN to the nearest dollar, what would be the size of the final payment? Round down to nearest dollar means for example 121.8 is rounded to $121.00 (NOT 122) c)...