Making monthly payments for twenty years

Assignment Help Finance Basics
Reference no: EM133115660

Your father has asked your advice on the following problem. He has a mortgage loan on the family home that was made several years ago when interest rates were lower. The loan has a current balance of $40,000 and will be paid off in twenty years by paying $330 per month. He has discussed paying off the loan ahead of schedule with an of?cer of the bank holding the mortgage. The bank is willing to accept $36,000 right now to pay it off completely. What interest rate would your father earn by paying off the loan right now rather than making monthly payments for twenty years? Your father is currently earning 9 percent in his investments. Would it be worthwhile paying off the loan if he has the money available?

Reference no: EM133115660

Questions Cloud

What is the price of the bond : Sunland Corp. issued five-year bond one year ago with coupon rate of 5.5 percent. If yield to maturity on this bond is 11 percent, what is the price of bond
What is the biggest concern of the investors : What is the biggest concern of the investors before lending the money for the company?
Discuss three dividend policies available : Discuss three dividend policies available to the company as it transforms from being a private to a public entity
Knowledge management and learning initiatives : You are working as employee at hospital. Hospitals are critical for knowledge management/learning initiatives for employees on many different healthcare topics
Making monthly payments for twenty years : Your father has asked your advice on the following problem. He has a mortgage loan on the family home that was made several years ago when interest rates were l
Determine operating income : If selling price is $60 per unit, variable cost are 45% of selling price and total fixed cost are $80,000 determine operating income if sales are 6,000 units
What is your pretax rate of return to date : Exactly four years ago, you purchased shares in a mutual fund for $500. All the dividends were reinvested in the fund, the current value of the shares you own,
What is the company long-term debt : A company has $1,322 in inventory, $4,755 in net fixed assets, $616 in accounts receivable, $266 in cash, What is the company long-term debt
Evaluate implications of changing environmental factors : Evaluate the implications of changing environmental factors on organizational choices within a global environment and formulate solutions.

Reviews

Write a Review

Finance Basics Questions & Answers

  Examine the following book-value balance sheet for

fairfield office supplies inc. has a regional chain of office supply stores in the midwest.nbsp fairfield is trying to

  What is the value of the enterprise at time zero

Construct the venture's balance sheet at startup. Then construct financial statements for Years 1 and 2. (Put initial fixed-asset investments in Year 0 and initial working capital investments in Year 1. Assume the initial $50,000 is equity financed.)..

  Draw a t-account for the extended warranty liability

Draw a T-account for the extended warranty liability, record the activity disclosed above in that account, and explain how the entries represent an application of the matching principle.

  How long has this person been a part of the team

Think about a team you know well. It could be a volunteer organization, a small group at work, or a sports team. If you were introducing a new idea-one that team members might resist-what would be important to know about each team member that migh..

  What is the cost of the handheld personal planner

Best Buy sells a handheld personal planner for $201.35. Best Buy marked up the personal planner 20% on the selling price.

  Do these provisions make bonds more or less risky

When we look at business ventures we are always looking for ways to raise capital in order to help our business grow over time. What are call and sinking fund provisions? Do these provisions make bonds more or less risky?

  How sociological factor influence path of scientific fields

How can a scientific discipline succeed if it is based on an assumption that is demonstrably false (such as the assumption that humans always rationally.

  Assessing interest rate differentials among countries

Do you think such a large difference in interest rates is due primarily to the difference between countries in the risk-free rates or in the credit risk premiums? Explain.

  Computing number of years

How long does Sam have before he will retire? (You are computing number of years. Round your answer to one decimal place. For example, record 14.294 years as 14.3).

  Explain the fact that rates of return required

How do you explain the fact that rates of return required by investors may be identical for two groups of totally different activities (oil and IT services, for

  What is the expected amount of the next dividend

The annual dividends of Blue Dye have been increasing at a rate of 2.4% and are expected to continue at this rate.

  Explain the following legal doctrines

Explain the following legal doctrines: a. Misrepresentation

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