What is your effective annual interest rate

Assignment Help Financial Management
Reference no: EM131848050

A home mortgage with monthly payments for 30 years is available at 6% interest. The home you are buying cost $120,000, and you have saved $12,000 to meet the requirement for a 10% down payment. The lender charges "points" of 2% of the loan value as a loan origination and processing fee. The is fee is added to the initial balance of the loan. 

a) What is your monthly payment? 

b) If you keep the mortgage until it is paid off in 30 years, what is your effective annual interest rate? 

c) If you move to a larger house in 10 years and pay off the loan, what is your effctive annual interest rate? 

d) If you are transferred in 3 years, what is your effective annual interest rate?

Reference no: EM131848050

Questions Cloud

Deposited in bank account earning : Shannon receives $100,000 as a gift, which ls,deposited in a bank account earning 6% compounded semiannually. how long will the money last?
What is the capital intensity ratio : Discount Outlet has net income of $389,100, a profit margin of 2.8 percent, and a return on assets of 8.6 percent. What is the capital intensity ratio?
What is the most you should pay for this investment : You can earn 12 percent on very similar investments. What is the most you should pay for this investment?
River cruises is all-equity-financed : River Cruises is all-equity-financed with 100,000 shares. What is the ratio of price to expected earnings for River Cruises before it borrows the $240,000?
What is your effective annual interest rate : If you keep the mortgage until it is paid off in 30 years, what is your effective annual interest rate?
What rate of interest are you charging your friend : You tell him that in five years he will have to pay you $700. What rate of interest are you charging your friend?
What is the present value of these cash inflows : What is the present value of these cash inflows at a discount rate of 8%?
Bought corporate bond with the time to maturity : Two years ago Hillary bought a corporate bond with the time to maturity of 8 years, yield to maturity of 10%, and face value of $1,000.
What is the current value of one-year european call option : Using a one-step binomial tree, what is the current value of a one-year European call option on XYZ with an exercise price of $12?

Reviews

Write a Review

Financial Management Questions & Answers

  Find the imputed interest income in dollars in the first

A newly issued 20-year maturity, zero-coupon bond is issued with a yield to maturity of 8.3% and face value $1,000. Find the imputed interest income in dollars in the first, second, and last year of the bond's life.

  Grow an investment to a specific amount of money

Which of the following statements about calculating the number of years needed to grow an investment to a specific amount of money is true?

  What is cost of equity-how does function in cost of capital

What is cost of equity and how does it function in the cost of capital? To increase a firm’s value, results should show your WACC is moving in which direction? What are those skills?

  Calculate the net present value and internal rate of return

Calculate the net present value and internal rate of return for the investment project.

  Which bond will have the lowest coupon rate

If the bonds all have the same maturity, which bond will have the lowest coupon rate?

  Estimate the present value of tax benefits from depreciation

Your Company is considering a new project that will require $630,000 of new equipment at the start of the project. The equipment will have a depreciable life of 9 years and will be depreciated to a book value of $153,000 using straight-line depreciat..

  Calculating returns and variability

Calculating Returns and Variability [LO1] You've observed the following returns on Crash-n-Burn Computer's stock over the past five years: 7percent, -13 percent, 21 percent, 34 percent and 15 percent. What was the arithmetic average return on Crash-n..

  Use the payback decision rule to evaluate this project

Suppose your firm is considering investing in a project with the cash flows shown below, Use the payback decision rule to evaluate this project.

  Calculate the yield using geometric average

what does the market believe that 2-year securities will be yielding 4 years from now? Calculate the yield using a geometric average.

  Calculate the yearly returns for both stocks

Calculate the yearly returns for both stocks - Calculate the average yearly returns - what happens as beta increases?

  The firm will not be issuing any new common stock

The firm will not be issuing any new common stock. What is Avery's WACC?

  What is the effective annual rate on the loan

Compute the monthly payments John will make on her home loan. What is the effective annual rate on the loan?

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