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You want to buy a house, but you still need to pay your car loan of $15,000 over the next 3 years. Your annual income is $50,000 and the bank estimates that your monthly mortgage payments should not represent more than 28% of your monthly income. You have decided to use that percentage of your current income to repay your car loan and to save for the down payment on the house. In this way you will adjust your current monthly expenses to be ready to make the same monthly payments for 30 years. You estimate that you can get a fixed interest rate of 6.5% on a 15-year mortgage. Closing costs are estimated to be 3% of the loan value and you can invest at an average rate of 5%. If the interest on the auto loan is 8%, determine the following: a) What is the monthly payment on the car loan? How much can you invest each month? b) If you decide to repay your car loan and invest the rest for the down payment at the same time, how much money will the bank loan you in five years? How much can you offer for the house? c) Is there any change in your answers for part (a) if you decide to pay off the car before you begin to investment for the down payment?
The standard deviation of stock returns for Stock A is 40%. The standard deviation of the market return is 20%. It the correlation between Stock A and the market is 0.70, then what is Stock A's beta? (Please show calculations)
Axel Telecommunications has a target capital structure that consists of 70% debt and 30% equity. The corporation anticipates that Axel capital budget for the upcoming year will be $3,000,000.
Suppose that the ABC company is expected to be worth $50 per share one year from today. The company pays annual perpetual dividend of $1 per share.
Jennifer owes $600 due in 9 months and $1,500 plus 6% interest due in 3 months. She wants to pay off both debts in a single payment in 11 months. How much should she pay if the money is worth 5%?
What are the stated objectives of the 2 a fore mentioned institutions?
Oilco must determine whether or not to drill for oil in the South China Sea. If the decision is "not drilling", the option can be sold for $10 million.
Shanken Corp. issued a 10-year, 8 percent semiannual bond 3 years ago. The bond currently sells for 96 percent of its face value.
Choose two other companies in same industry. One should be one which you would pay less for a $2,000 bond than you would from Under Armour, Inc and another one that you would pay more for a $2,000 bond from Under Armour, Inc. Would pay more or less..
The first deposit will occur one year from today (that is, at t = 1) and the last deposit will occur 15 years from today (that is, at t = 15). How much money will be in the account 15 years from today?
Atlanta Cement, Inc. buys on terms of 2/15, net 30. It does not take discounts, and it typically pays 115 days after the invoice date. Net purchases amount to $720,000 per year. What is the nominal annual percentage cost of its non-free trade cred..
Imagine a simple economy with only two people. Augustus and Livia. Let the social welfare function be.
Banking and insurance companies have invaded each other's territory and share information. To gather more information about this growing trend toward.
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