Question

In: Finance

9.1. Obtain the total periodic payments of a loan of 16,000€ and 3 years term, with...

9.1. Obtain the total periodic payments of a loan of 16,000€ and 3 years term, with the following conditions:

a. Adjustable interest rate.
Annual adjustment period: 1 year.
Type of loan: Semi-annually constant principal repayments over 3 years.
Nominal interest rate for the 1st period: 3%
Interest rates for the remaining periods: the index rate plus 0.5 percentage points.

The index rate take the following values for the other periods:

ir = 0.05 ; ir = 0.045

Find the periodic payments to be made.

b. Monthly constant payments over each adjustment period.
Annual adjustment period: 1 year.

Nominal interest rate for the 1st period : 5%.
Remaining periods: index rate plus 0.3 percentage points.
The index rates take the following values for each of the periods:

ir = 0.06 ; ir = 0.04

Find the periodic payments to be made.

c. Adjustable interest rate.
Annual adjustment period: 1 year.
Type of loan: quarterly constant principal repayments over 3 years.
Nominal interest rate for the 1st period: 7%
Interest rates for the remaining periods: the index rate plus 0.2 percentage points.

The index rates take the following values for the other periods:

ir = 0.035 ; ir = 0.05

Find the periodic payments to be made.

Solutions

Expert Solution

a. Semi-annually constant principal repayments over 3 years

Workings:

b. Monthly constant payments over each adjustment period

Workings:

c. quarterly constant principal repayments over 3 years

Workings:

jeff jeffy answered 1 year ago
Next > < Previous

Related Solutions

You obtain a loan of $300,000 at 5.75% amortized over thirty years with monthly payments.
Can you please help me the steps of this Finance Math problem?You obtain a loan of $300,000 at 5.75% amortized over thirty years with monthly payments. You are required to pay closing costs and fees of 1.0% of the loan amount to the lender. What is the yield of the loan if paid off at maturity?
You obtain a loan of $150,000 at 5.875% amortized over thirty years with monthly payments.
You obtain a loan of $150,000 at 5.875% amortized over thirty years with monthly payments. You are required to pay closing costs and fees of 2.0% of the loan amount to the lender. What is the yield of the loan if paid off at the end of 5 years? 
You obtain a loan of $150,000 at 5.875% amortized over 30 years with monthly payments. You...
You obtain a loan of $150,000 at 5.875% amortized over 30 years with monthly payments. You are required to pay closing costs and fees of 2% of the loan amount to the lender. What is the yield of the loan if paid off at the end of 5 years?
Suppose that you have two loan choices with monthly payments Choice Loan Amount Term (years) Interest...
Suppose that you have two loan choices with monthly payments Choice Loan Amount Term (years) Interest Rate 1 $ 250,000 30 5% 2 $ 220,000 30 4.50% A) What is the annual incremental borrowing cost for loan 1 over loan 2 if you hold the loan for the entire term, assuming there is no origination cost associated with the loans? 3.34% 5.34% 8.34% 10.34% B) If the origination costs for loans 1 and 2 are $3,500 and $2,500 respectively, and...
3) You have issued a term loan to a borrower at 4% for 4 years on...
3) You have issued a term loan to a borrower at 4% for 4 years on $25m. They are ecstatic because they (and you) believe interest rates will go up in that 4-year period, but you needed to do the loan because you want the customer’s business. To save your Spread, you decide to buy a $25m notional principal interest rate swap for 4% Fixed to receive SOFR+2%. Assume SOFR for the next 4 years are expected to be 4.25%,...
Laura and John qualify for a 6-year car loan with a 9.1% APR or a 3-year...
Laura and John qualify for a 6-year car loan with a 9.1% APR or a 3-year car loan with an 7.5% APR. They found a new 2018 Ford Tundra listed at $49,400. Their combined monthly income is $5800 during surf season, but they know that will drop in the winter. They know they shouldn’t pay more than 10% of their income on car payments. b. Assuming Laura and John will make payments for the entire life of the loan, how...
Sammie is repaying a loan with quarterly payments for 30 years. The payments in the first...
Sammie is repaying a loan with quarterly payments for 30 years. The payments in the first year are 25 each. The payments in the second year are 50 each. The payments in the third year are 75 each. The payments continue to increase in the same pattern until the payments in the 30th year are 750 each. The loan has a nominal interest rate of 6% compounded quarterly. Calculate the amount of Sammie’s loan.
Two payments of $16,000 and $3,200 are due in 1 year and 2 years, respectively. Calculate...
Two payments of $16,000 and $3,200 are due in 1 year and 2 years, respectively. Calculate the two equal payments that would replace these payments, made in 6 months and in 4 years if money is worth 5% compounded quarterly.
Compare the monthly payments and total loan costs for the following pairs of loan options. Assume...
Compare the monthly payments and total loan costs for the following pairs of loan options. Assume that both loans are fixed rate and have the same closing costs. You need a ​$90,000 loan. Calculate Option​ 1: a​ 30-year loan at an APR of 6.65​%. Option​ 2: a​ 15-year loan at an APR of 6.25%.
Compare the monthly payments and total loan costs for the following pairs of loan options. Assume...
Compare the monthly payments and total loan costs for the following pairs of loan options. Assume that both loans are fixed rate and have the same closing costs. You need a ​$110,000 loan. Option​ 1: a​ 30-year loan at an APR of 7.25​%. Option​ 2: a​ 15-year loan at an APR of 6.8%. --------------------------------------------------------------------------------------------------------- 1.) Find the monthly payment for each option. The monthly payment for option 1 is what? The monthly payment for option 2 is​what?. ​(Do not round...
ADVERTISEMENT
Subjects
ADVERTISEMENT
Latest Questions
ADVERTISEMENT