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A ?fteen-year adjustable-rate mortgage of $117,134.80 is being repaid with monthly payments of $988.45 based upon a nominal interest rate of 6% convertible monthly. Immediately after the 60th payment, the interest rate is increased to a nominal interest rate of 7.5% convertible monthly. The monthly payments remain at $988.45, and there will be an additional balloon payment at the end of the ?fteen years to pay the outstanding loan balance.
(a) Calculate the loan balance immediately after the 84th payment.
(b) Calculate the amount of interest in the 84th payment.
(c) Calculate the amount of the balloon payment
NOTE: use formula to solve
You have the following rates of return for a risky portfolio for several recent years. Assume that the stock pays no dividends. Year Beginning of Year Price # of Shares Bought or Sold 2008 $95 240bought 2009 $100 190bought 2010 $96 215sold 2011 $99 2..
Two depreciation methods are being considered for new hospital surgery equipment.
Determine a suitable Minimum Acceptable Rate of Return (MARR) for this investment.
By what amount does the interest tax shield from its debt lower? Summit's WACC?
A stock is expected to pay a year-end dividend of $2.00 a share (D1 = $2.00). The dividend is expected to decline at a constant rate of 5% per year (g = -5%). The company’s expected and required rate of return is 15%. Which of the following statement..
What is the beta of your portfolio?
Who is responsible for the make-or-buy decision and what other suggestions can you make for improving the situation at Donley Brothers
Jiminy’s Cricket Farm issued a bond with 15 years to maturity and a semiannual coupon rate of 8 percent 3 years ago. The bond currently sells for 96 percent of its face value. The company’s tax rate is 35 percent. What is the pretax cost of debt? (Do..
What is this bond’s current yield to maturity?
Your firm is considering a project with a five-year life and an initial cost of $120,000. The discount rate for the project is 12%. The firm expects to sell 2,100 units a year. What is the net present value of this project given your sales forecasts?
Suppose a firm is considering a labor-saving investment. In year 0, the project requires an $11,700 investment in equipment (all figures are in thousands of dollars). This investment is depreciated using the straight-line method over five years and t..
What maximum price would you pay for a standard 8% level-coupon bond that has 10 years to maturity if the prevailing discount rate is an effective 10% per annum?
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