Reference no: EM132920872

Question - You are looking to finance your business, assuming you can get a loan of $58600 loan in the form of a 60-month fixed payment at an annual rate of 5.2%.

a) Compute what the monthly payment will be.

b) Compute the interest and the principal repaid for month 1, 15, and 45.

c) Describe and explain the observations you are able to make over the differences you can identify on the amount of principal being repaid and the amount of interest between month 1 and month 45.

In the even that you cannot secure a loan from bank, you are tap into the insurance policy your family set up from you 10 years ago. Your spouse contributed six consecutive contributions to the insurance company as follows:

-at inception, then at the end of the first and second year $800

-at the end of the third, fourth and fifth year $1000after the sixth payment, no more payments were made. After 10 years, the insurance policy can now be terminated, and you will due to received $8000.

The relevant interest rate for investing the same amount of money in an interest-bearing account was 5 percent for the first three years and 3 percent of all subsequent year.

d) Compute the value of the contributions made on your policy at the end of the third, sixth and tenth year in the case where they would have been invested in an interest-beaing account instead of the insurance policy.

e) Determine and discuss whether the policy was worth buying.