Most reasonable explanation for discrepancy

Assignment Help Financial Management
Reference no: EM131027085

You are planning on starting your own business in 18 months and you intend to purchase a new home. You have looked carefully at your budget and have determined that you can afford a PITI of $900 per month. Your banker has told you that you can easily qualify for a PITI of $1,150 per month. Which of the following is the most reasonable explanation for this discrepancy?

a. Your banker knows you really would be happier in a more expensive house.

b. Your banker is not aware of your other long-term financial goals.

c. Your banker's number is more accurate than your number.

d. None of these is a reasonable explanation.

Reference no: EM131027085

Questions Cloud

What options are available to sony in strong yen environment : Assume that, on an average, Sony spends ¥30,000 to manufacture its products in Japan and spends $30 on marketing and distribution in the United States. Sony sells the product in the United States on an average at a price of $350 per product. If Sony ..
What is market value of equity if market value of debt : A firm has a debt-to-equity ratio of 1. Its cost of equity is 12%, and its cost of debt is 6%. If there are no taxes or other imperfections, what would be its cost of equity if the debt-to-equity ratio were 0. Using the information directly above, wh..
Liquidation proceeds exercise : Liquidation Proceeds Exercise—A mature company’s founders and investors are considering several harvest proposals. The company was founded in March 2011 with $ 200,000 in founder funds and $ 300,000 in family loans (8% interest annual interest accrue..
What is effective annual return friendlys earns : Friendly’s Quick Loans, Inc., offers you $7.25 today but you must repay $9.25 when you get your paycheck in one week (or else) 1)What is the effective annual return Friendly’s earns on this lending business? 2) If you were brave enough to ask, what A..
Most reasonable explanation for discrepancy : You are planning on starting your own business in 18 months and you intend to purchase a new home. You have looked carefully at your budget and have determined that you can afford a PITI of $900 per month. Your banker has told you that you can easily..
Thinking about buying a house : Hector a Maria have been married for almost one year now and are thinking about buying a house. Maria is an executive for a large, multi-national corporation with offices around the world. She has been told by her company that she will be transferred..
Fixed-rate mortgage is harder to budget : A fixed-rate mortgage is harder to budget for than an adjustable rate mortgage. The rate cap on an ARM sets a dollar limit on how much your monthly payment can increase during any adjustment period. The rate cap on an ARM protects the borrower.
The most reasonable explanation for this discrepancy : You are planning on starting your own business in 18 months and you intend to purchase a new home. You have looked carefully at your budget and have determined that you can afford a PITI of $900 per month. Your banker has told you that you can easily..
The international fisher effect holds : Assume that the U.S. one-year interest rate is 5% and the one-year interest rate on euros is 8%. You have $100,000 to invest and you believe that the international Fisher effect (IFE) holds. The euro's spot exchange rate is $1.40. What will be the yi..

Reviews

Write a Review

Financial Management Questions & Answers

  What is the price today for bacon signs bond

Ten years ago Bacon Signs Inc. issued twenty-five-year 8% annual coupon bonds with a $1,000 face value each. Since then, interest rates in general have fallen and the yield to maturity on the Bacon bonds is now 7%. Given this information, what is the..

  Hedge their euro and dollar exposure

On January 2d, 2014, Microsoft expects to ship 1,000,000 new X-Boxes from its US plant, which it will sell through EU dealers on 270-day terms at 250 Euro each. So Microsoft will receive payment from its dealers on September 28th, 2014.

  Material ordering costs-labor costs and credit sales

Write a memo to your supervisor explaining the cash conversion cycle at your company, a manufacturer of plastic toys. Be sure to address the following: Material ordering costs, Labor costs, Credit sales (accounts receivables), Accounts payable and wa..

  Present value of future annual earnings

Just before his first attempt at bungee jumping, John decides to buy a life insurance policy. His annual income at age 30 is $36,000, so he figures he should get enough insurance to provide his wife and new baby with that amount each year for the nex..

  Bonds price changes as interest rates change

If two bonds have the same duration, the change in their price when interest rates change will be the same. For non-callable bonds, duration provides only a linear approximation of a bond's price changes as interest rates change.

  Each coupon represented a promise to pay

On February 2, 2013, an investor held some Province of Ontario stripped coupons in a self-administered RRSP at ScotiaMcLeod, an investment dealer. Each coupon represented a promise to pay $100 at the maturity date on January 13, 2019 but the investor..

  Break-even analysis

The Hartnett Corporation manufactures baseball bats with Pudge Rodriguez’s autograph stamped on them. Each bat sells for $35 and has a variable cost of $22. There are $97,500 in fixed costs involved in the production process. Compute the break-even p..

  Number of periods of a single payment

If you deposit money today in an account that pays 8.5% annual interest, how long will it take to double your money? Round your answer to the nearest whole number

  Using the dividend discount model

Yippie is a recent startup and is currently not paying any dividends. The earnings in 2006 are expected to be $4 a share and analysts predict that Yippie’s earnings will grow at an annual rate of 30% for the next three years (until 2009). What is the..

  Uniquely designed to the customers specifications

Auto Art sells original works of art on a prepaid basis as each piece is uniquely designed to the customer's specifications. For one project, the cash flows are $9,500 and -$10,300 for years 0 and 1, respectively. Based on the internal rate of return..

  Explain what happens to the market rate of interest

the market rate of interest will sell for a discount and that a vanilla bond which has a coupon rate above the market rate of interest will see for a premium. What kind of bond or loan will sell at its par value regardless of what happens to the m..

  What was dividend yield and capital gains yield

Suppose a stock had an initial price of $72 per share, paid a dividend of $1.20 per share during the year, and had an ending share price of $61. Compute the percentage total return. What was the dividend yield and the capital gains yield?

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