Calculate the payment first

Assignment Help Finance Basics
Reference no: EM132045769

Question: Some home loans involve "points," which are fees charged by the lender. Each point charged means that the borrower must pay 1% of the loan amount as a fee. For example, if 0.5 point is charged on a $100,000 loan, the loan repayment schedule is calculated on the $100,000 loan, but the net amount the borrower receives is only $99,500. What is the effective annual interest rate charged on such a loan, assuming that loan repayment occurs over 360 months, and that the interest rate is 1% per month? Hint: The monthly payment is based on $100,000. Calculate the payment first. The PV that the borrower receives is $99,500. Now think about the nominal rate and then the effective rate.

Reference no: EM132045769

Questions Cloud

Calculate the net benefit of accepting the special order : Tobitzu TV produces wall mounts for flat panel television sets. Calculate the net benefit (cost) of accepting the special order
What is the value of an investment that will pay investors : What is the value of an investment that will pay investors 1, 950 dollars per year for 8 years and will also pay investors an additional 8, 500 dollars.
Calculate the net benefit of outsourcing the bookkeeping : The bookkeeper's wages and fringe benefits amount to $15 per hour, Calculate the net benefit (cost) of outsourcing the bookkeeping
Discuss the effect of global political uncertainty : Post an analysis of the financial and nonfinancial factors that influence foreign currency risk. In your analysis, do the following: Discuss the effect.
Calculate the payment first : Some home loans involve "points," which are fees charged by the lender. Each point charged means that the borrower must pay 1% of the loan amount as a fee.
Laboratory frame of reference : A body of mass m1 and velocity v1 collides with a body of mass m2 at rest.
How much will be available in your account : You want to save some money for your two dream vacations as well as have some money available during your retirement years. Today is your 35th birthday.
What are the primary sources of tax law : Suppose you have a concern about taking a particular position on a tax return. What are the primary sources of tax law
Determine the proposal internal rate of return : Apache Junction Company is evaluating a capital expenditure proposal that requires an initial investment of $34,520, has predicted cash inflows of $8,000.

Reviews

Write a Review

Finance Basics Questions & Answers

  What should you pay for the stock

Given the following information, calculate the current value of the stock: current dividend is $3.00, projected super normal growth for three years at 20%, growth rate after year 3 should remain constant at 11% and you want to earn a 16% annual re..

  Suppose payments were made at the end of each month into

suppose payments were made at the end of each month into an ordinary annuity earning interest at the rate of 9year

  Relationships between manufacturers-international dealers

Summarize in detail Fites' article. In your summary, identify and describe the six principles and practices which Fites suggests that create tight relationships

  What is the option moneyness

A call option is written on a futures contract. It has a three-month maturity and a strike price of EUR 100. Three-month interest rates are 4%. The current futures price is EUR 100. What is the option moneyness?

  Find the value of the bond if the required return is given

Bond value and changing required returns Midland Utilities has outstanding a bond issue that will mature to its $1,000 par value in 12 years.

  Compare the calculated financial ratios against the industry

Compare the calculated financial ratios against the industry benchmarks for the industry of your assigned company

  Computation of cost of debt bonds and common equity for

computation of cost of debt bonds and common equity for wacc.cost of capital coleman technologies is considering a

  What is the value of the option if abandon the mine

The current discrete-time risk-free rate of return is 5%. What is the value of the option if abandon the mine?

  The statistical definition of six sigma allows

The statistical definition of Six Sigma allows for 3.4 defects per million. This is achieved by a Cpk index of

  A company-wide policy with respect to bereavement leave

The organization is planning to implement a company-wide policy with respect to bereavement leave that provides the same benefits to all employees, regardless of their province/territory of employment or their length of employment.

  Defined contribution plans and defined benefit plans

Peter is currently 30 years old and he plans to retire early, in 25 years' time. He would like to have an income of $50,000 per year during his retirement.

  The franciscos investment options

The Franciscos' Investment Options- Hector Francisco is a successful businessman in Atlanta. The box-manufacturing firm he and his wife, Judy, founded several years ago has prospered.

Free Assignment Quote

Assured A++ Grade

Get guaranteed satisfaction & time on delivery in every assignment order you paid with us! We ensure premium quality solution document along with free turntin report!

All rights reserved! Copyrights ©2019-2020 ExpertsMind IT Educational Pvt Ltd