Pay off the remaining balance of loan after making payments

Assignment Help Financial Management

Reference no: EM131839809

You are borrowing $215,000 to purchase your new home. The mortgage offers a 6% fixed annual rate of interest and the balance is amortized over a 30-year period. You do not have to pay any points or origiantion fees, but a penalty equal to 3% of the remaining loan balance is charged if the loan is repaid in full at any time within the first five years.

If you pay off the remaining balance of the loan after making payments for 7 years, what is the effective cost of borrowing?

Reference no: EM131839809

Questions Cloud

Common views of compensation shared by employees : Identify and explain any common views of compensation shared by employees, employers, and society.

What is this person certainty equivalent for the prospect : What is the expected value of wealth? What is this person’s certainty equivalent for the prospect?

Research and development expenses grown as fast as sales : Does 3M have a lot of long-term debt? What are the chief ways in which 3M has financed assets? Has 3M’s research and development expenses grown as fast as sales

Risk for different time horizons and confidence levels : Find the value at risk for different time horizons and confidence levels of a 1,000$ portfolio in Dell and Microsoft stocks.

Pay off the remaining balance of loan after making payments : You are borrowing $215,000 to purchase your new home. what is the effective cost of borrowing?

Determine betsy maximum cost recovery deduction : Determine Betsy’s maximum cost recovery deduction with respect to her purchases in 2016:

Unethical behavior or merely an investment strategy : What is your opinion of this type of arbitrage as it relates to foreign exchange—is this unethical behavior or merely an investment strategy?

What was charge for depreciation and amortization : It had $3.06 million of interest expense, and its corporate tax rate was 40%. What was its charge for depreciation and amortization?

Estimate present value of the tax benefits from depreciation : The cost of capital is 11%, and the firm's tax rate is 39%. Estimate the present value of the tax benefits from depreciation.

User Account

All Pages