Reference no: EM133118571
Cathy is 48 years old, and Jamie is 49 years old. They have been married for the past 22 years and have no children. They are both senior managers with over 15 years each working for the federal government. They each make $75,000 per year in gross pay from their respective jobs and have no other sources of income. The first year they were married they bought a house, which is now worth $425,000 and does not have a mortgage on it. They pay $3,600 per year in property tax and $100 per month in heat. They also pay $100 per month in hydro, $80 per month in cable and phone service, and $635 per year in home insurance. The couple owns one car, a dodge Caravan worth $15,000, and they have a loan outstanding with a balance of $10,000 and a monthly payment of $550. The couple only has one credit card, an Everyday Bank MasterCard, with a $5,000 limit and no balance. They have no other debt outstanding.
Cathy has an RRSP totalling $128,000, and Jamie's RRSP totals $114,000. They have a joint savings account with an $18,000 balance and a chequing account with a $2,000 balance. They also have a non-registered mutual fund worth $52,000. They have been dealing with Everyday Bank for the past 22 years. A quick check of their credit bureau reports indicates that they both have excellent credit history. Cathy and Jamie are hoping to purchase a brand new motor home to do some travelling and have dropped by to see you at Everyday Bank for a loan. The motor home costs $65,000. They are prepared to contribute $15,000 from their savings if you can give them a loan for $50,000 with a 10-year amortization (and term) at 4% with monthly payments of $506.
Assuming you would approve the loan and wanted to take some form of collateral:
1. List three assets you could take to secure the loan (other than a personal guarantee) and explain the positive and negative aspects of taking each item as collateral (from the lending institution's perspective or the borrower's perspective)
2. Which of the items you listed would you prefer to take as collateral?
|
Annual deposits into the retirement account
: Today is Derek's 25th birthday. Derek has been advised that he needs to have $3,644,760.00 in his retirement account the day he turns 65. He estimates his retir
|
|
Premium cards offered by competitors
: What benefits does Bank of America's new premium credit card offer that are better than the premium cards offered by its competitors?
|
|
What is his break-even point in unit sales and dollar sales
: 2. Assume that Hooper places an initial order for 75 sweatshirts. What is his break-even point in unit sales and dollar sales
|
|
Calculate the estimated loss on the inventory in the flood
: Prepare a schedule to calculate the estimated loss on the inventory in the flood, using the gross profit method
|
|
Explain the positive and negative aspects
: Cathy is 48 years old, and Jamie is 49 years old. They have been married for the past 22 years and have no children. They are both senior managers with over 15
|
|
Sources of financing in international capital markets
: Explain how the following risks may affect the 3 sources of financing in international capital markets. In addition, explain how these risks may influence a com
|
|
Expectations theory of the term structure of interest rates
: Suppose that the spot interest rate on a one-year zero-coupon bond is 3% and the spot interest rate on a two-year zero-coupon bond is 4%. Based on the expectati
|
|
What is the expected one-year rate
: Suppose that the one-year, two-year, and three-year zero-coupon rates are 1.5%, 2.5%, and 5.0%. Based on the expectations theory, what is the expected one-year
|
|
How have big tech firms positioned themselves
: How have Big Tech firms positioned themselves to offer credit and lending products to consumers and businesses?
|