How much should the lender be willing to loan

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Problem: In Question 1 (with 120 equal monthly payments of $1,250) suppose the borrower also offers to pay the lender $50,000 at the end of the 10-year period (coinciding with, and in addition to, the last regular monthly payment). How much should the lender be willing to lend?

Question 1: In Question 2, suppose that not only will the interest be compounded monthly, but the payments will also arrive monthly in the amount of $1,250 per month (the first payment to arrive in one month)?

Question 2: A real estate investor feels that the cash flow from a property will enable her to pay a lender $15,000 per year, at the end of every year, for 10 years. How much should the lender be willing to loan her if he requires a 9% annual interest rate (annualy compounded, assuming the first of the 10 equal payments arrives one year from the date the loan is disbursed)?

Reference no: EM131734119

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