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 you hold the loan for 6 years (72 months), what is annual incremental borrowing cost of loan 1 over loan 2?

5.29%

10.29%

8.55%

9.29%

Expert Solution

SEE THE IMAGE. ANY DOUBTS, FEEL FREE TO ASK. THUMBS UP PLEASE

jeff jeffy answered 10 months ago

A loan will be repaid in 5 years with monthly payments at a nominal interest rate...

A loan will be repaid in 5 years with monthly payments at a nominal interest rate of 9% monthly convertible. The first payment is $1000 and is to be paid one month from the date of the loan. Each succeeding monthly payment will be 2% lower than the prior payment. Calculate the outstanding loan balance immediately after the 40th payment is made.

A loan amount of L is amortized over six years with monthly payments (at the end...

A loan amount of L is amortized over six years with monthly payments (at the end of each month) at a nominal interest rate of i(12) compounded monthly. The first payment is 500 and is to be paid one month from the date of the loan. Each subsequent payment will be 1% larger than the prior payment. (a) If i(12) = 9%, find the principal repaid in the 25th payment. (b) If i(12) = 12%, find the amount of loan...

suppose you take a mortgage for $95,000 at 6.50% for 30 years, monthly payments. the loan...

suppose you take a mortgage for $95,000 at 6.50% for 30 years, monthly payments. the loan has a 5% prepayment penalty if the loan is repaid within the first 5 years of life. if you repay the loan at the end of year 4 what is the payoff of the loan? A- 0 B- 4,515 C- 90,307 D-156,250 You to refinance your current mortgage that has a current balance of $150,000 and does not have a prepayment penalty. Your lender...

A $40,000 mortgage loan charges interest at 6.6% compounded monthly for a four-year term. Monthly payments...

A $40,000 mortgage loan charges interest at 6.6% compounded monthly for a four-year term. Monthly payments were calculated for a 15-year amortization and then rounded up to the next higher $10. a) What will be the principal balance at the end of the first term? b) What will the monthly payments be on renewal for a three-year term if it is calculated for an interest rate of 7.2% compounded monthly and an 11-year amortization period, but again rounded to the...

Amanda and Sal have a loan for $185,000 at 7% interest. If their monthly payments are...

Amanda and Sal have a loan for $185,000 at 7% interest. If their monthly payments are $1,230.81, how much of their second payment will go to principal?

A) For a loan of $160,000 at 7% annual interest, monthly payments, for 30 years, how...

A) For a loan of $160,000 at 7% annual interest, monthly payments, for 30 years, how much total interest will be paid over the life of the loan? Group of answer choices $279,785.00 $81,002.00 $223,214.00 $265,778.00 B) For a loan of $250,000 at 6% annual interest, with monthly payments over 15 years, if you pay an additional $100 in principle per month, how much total interest will you pay over the life of the loan? Group of answer choices $218,090.00...

Determine the monthly payment using the added interest method Loan Amount: $ 2,700 Loan term: 2...

Determine the monthly payment using the added interest method Loan Amount: $ 2,700 Loan term: 2 years Interest rate: 7.5% monthly payment: ______?

A loan is being amortized over n-years with monthly payments of $295.32. The rate of interest...

A loan is being amortized over n-years with monthly payments of $295.32. The rate of interest on the loan is j12=12%. The principal repaid in the 25th payment is $206.41.What is the size of the loan?

A loan is amortized over five years with monthly payments at an annual nominal interest rate...

A loan is amortized over five years with monthly payments at an annual nominal interest rate of 6% compounded monthly. The first payment is 1000 and is to be paid one month from the date of the loan. Each succeeding monthly payment will be 3% lower than the prior payment. Calculate the outstanding loan balance immediately after the 40th payment is made.

Loan amount- 1,200,000 Term(years)- 15% Interest rate- 3.125% Payment frequency- monthly can anyone please solve this...

Loan amount- 1,200,000 Term(years)- 15% Interest rate- 3.125% Payment frequency- monthly can anyone please solve this in excel with formulas for each cells.

Question