What should be the annual payment for the last two year

Assignment Help Financial Management

Reference no: EM131972568

You lend your friends $300,000 for 6 years. According to the agreement, your friend has to repay $80,000 annually for the first four year with a fixed interest rate of 16% compounded annually.

1. Your friend tries to bargain for a 2% lower interest charged for the remaining periods. What should be the annual payment for the last two year?

2. if your friend insists to repay exactly the same amount as the previous years, how much would be the annual interest Rate for the last two years?

Peter deposits $70,000 in a fixed account earning an annual compounded interesr of 14.25% on his graduation day (march 1995) he also decides to save monthly in a saving account earning 12% annual interest compounded monthly.

In march 2000, he will spend all his money from this two accounts to purchase a home worth $1,500,000 (total balance of these 2 accounts are zero)

1. how much is the total balance of his saving account in march 2000?

2. how much is each monthly saving in his saving account in order to buy his home

3. if the home's price is changed. he has to set aside 40% of his monthly salary of $50,000 and deposits them in his savings account earning 12% annual interest. how much would be the new price of the home?

Reference no: EM131972568

Questions Cloud

No need to consider diversification or risk : How long will it take you to become a millionaire? No need to consider diversification or risk.

Discuss the three type of inventory : Discuss the three type of inventory?

What will be flotation-adjusted cost of equity : Assume Brown-Murphies faces a flotation cost of 15 percent on new equity issues. What will be the flotation-adjusted cost of equity?

Discuss the overall trend in corporate cash holding : Discuss the relationship between cash holding and agency costs? Discuss the overall trend in corporate cash holding?

What should be the annual payment for the last two year : Your friend tries to bargain for a 2% lower interest charged for the remaining periods. What should be the annual payment for the last two year?

Performing the actions of finding the property : The “finder” of the wallet can only “accept” Martin’s offer by actual performance – performing the actions of finding the property

What is the effective annual rate on the credit card : You just opened a credit card account with a quoted rate, or APR, of 18% per annum. What is the effective annual rate on the credit card?

Increasingly irresponsible lifestyle : Hans’s increasingly irresponsible lifestyle has become a burden to his parents.

Citing widespread consumer abuses : Citing “widespread consumer abuses”, the Fed on Friday has pushed Wells Fargo to take steps regarding its board and to

User Account

All Pages