Five years ago Nirdosh borrowed $1,500 at 6.5% compoundedsemi-annually. The interest rate changed to 5%...

Five years ago Nirdosh borrowed $1,500 at 6.5% compounded semi-annually. The interest rate changed to 5% compounded monthly one and a half year ago. What amount of money today is required to pay off the loan?

Expert Solution

RATE FOR 3.5 YEARS = 6.5% SEMI ANNUAL COMPOUNDING

RATE FOR NEXT 1.5 YEARS = 5% COMPOUNDED MONTHLY

AMOUNT BORROWED = 1500

r1 = 6.5%/2 = 3.25%, r2 = 5%/12 = 0.4166667%, n1 = 3.5 x 2 = 7 , n2 = 1.5 x 12 = 18

AMOUNT REQUIRED TO PAYOFF LOAN = FV = PV*(1+ r1)^n1 *(1+r2)^n2

AMOUNT REQUIRED TO PAYOFF LOAN = FV = 1500*(1+ 0.0325)^7 *(1+0.004166667)^18

AMOUNT REQUIRED TO PAYOFF LOAN = FV = 1500*1.250922552*1.077716211 = 2022.21

Answer : 2022.21

jeff jeffy answered 2 years ago

Five years ago you borrowed $100,000 to finance the purchase of a $120,000 house. The interest...

Five years ago you borrowed $100,000 to finance the purchase of a $120,000 house. The interest rate on the old mortgage is 10%. Payment terms are being made monthly to amortize the loan over 30 years. You have found another lender who will refinance the current outstanding loan balance at 8% with monthly payments for 30 years. The new lender will charge two discount points on the loan. Other refinancing costs will equal $3,000. There are no prepayment penalties associated...

Five years ago you borrowed $100,000 to finance the purchase of a $120,000 home. The interest...

Five years ago you borrowed $100,000 to finance the purchase of a $120,000 home. The interest rate on the old mortgage loan is 8 percent. Payments are being made monthly to amortize the loan over 30 years. You have found another lender who will refinance the current outstanding loan balance at 5.5 percent with monthly payments for 30 years. The new lender will charge two discount points on the loan. Other refinancing costs will equal $3,500. There are no prepayment...

RM60,000 is borrowed for 12 years at 5% compounded annually. The borrower does not pay interest...

RM60,000 is borrowed for 12 years at 5% compounded annually. The borrower does not pay interest currently and will pay all accrued interest at the end of 12 years together with the principal. (a) Find the amount annual sinking fund deposit necessary to liquidate the loan at the end of 12 years if the sinking fund earns 3% yearly compounding and the borrower make first payment immediately. (b) Prepared a sinking fund schedule. Ans: (a) RM 7,371.25

9 years ago you borrowed $147695 to buy a house. The interest rate quoted to you...

9 years ago you borrowed $147695 to buy a house. The interest rate quoted to you was 6.26 percent for 30 years with monthly payments. Assuming you have made regular monthly payments up to now, what is the amount (in $) you still owe on the loan today? Answer to two decimals. Hint: The hard way to do this is to use an amortization table. There is an easier way - see if you can find it. Can you explain...

Given a nominal interest rate of 6.5% compounded semi-annually, compute: a) The equivalent nominal rate of...

Given a nominal interest rate of 6.5% compounded semi-annually, compute: a) The equivalent nominal rate of discount compounded quarterly b) The equivalent constant force of interest

lindsay borrowed a certain amount of money for 5 years at an annual simple interest rate...

lindsay borrowed a certain amount of money for 5 years at an annual simple interest rate of 6.2%. if the maturity value oj the loan was $4,135, what was the total amount interest she paid on the loan?

Five years ago you took out a 5/1 adjustable rate mortgage and the five-year fixed rate...

Five years ago you took out a 5/1 adjustable rate mortgage and the five-year fixed rate period has just expired. The loan was originally for $300,000 with 360 payments at 4.2% APR, compounded monthly. a. Now that you have made 60 payments, what is the remaining balance on the loan? b. If the interest rate increases by 1%, to 5.2% APR, compounded monthly, what will be your new payments? a. Now that you have made 60 payments, what is the...

(c)Mr. Othman borrowed RM45,000 for five years at an interest rate of 12%, compounded monthly. Payments...

(c)Mr. Othman borrowed RM45,000 for five years at an interest rate of 12%, compounded monthly. Payments are made by monthly instalments. Based on the information given, how much is his monthly loan payment?

Suppose, three years ago, you purchased a 15-year coupon bond paying 5% interest annually with a...

Suppose, three years ago, you purchased a 15-year coupon bond paying 5% interest annually with a face value of $1000. It is now three years later and you just received an interest payment yesterday (the bond matures in exactly twelve years). You look in the paper and the yield on comparable debt is 6%. If you bought it at Par value, did you have a capital gain or loss? Also, if the yield decreased to 4.5%, would you have a...

Five years ago, Richard borrowed $300,000 to purchase a house inSandy Lake. At the time,...

Five years ago, Richard borrowed $300,000 to purchase a house in Sandy Lake. At the time, the quoted rate on the mortgage was 6 percent, the amortization period was 25 years, the term was 5 years, and the payments were made monthly. Now that the term of the mortgage is complete, Richard must renegotiate his mortgage. If the current market rate for mortgages is 8 percent, what is Richard’s new monthly payment? (Round effective monthly rate to 6 decimal places,...

Question