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Emily and Joel Schumaker are married clients who have just been approved for a twenty-year, $150,000 mortgage. They have been given a choice of two loans. One loan has an annual percentage rate (APR) of 8 percent and does not carry a fee, and the other has an APR of 7.5 percent but carries a discount fee of 2 percent of the initial loan amount. The fee for the second mortgage is payable in cash at loan inception and cannot be financed with the loan.
Question 1: From a present value cost perspective, which loan is the better deal, assuming (a) they sell their home immediately after making ten years' worth of payments and (b) they require a 9 percent effective annual rate of return? Stated another way, which option has the lower cost?
When conducting the analysis, assume all required payments are made at the end of each month and that interest is compounded monthly. Remember to consider the difference in loan payment, the difference in remaining balance at the time of sale, and the present value of the discount points on an after-tax basis assuming the points are fully deductible. For the purposes of this question, assume the clients are in a marginal 25 percent tax bracket. (Hint: You can solve this problem at either T0 or T120.)
On January 1, 2013, Legion Company sold $230,000 of 4% ten-year bonds. Interest is payable semi annually on June 30 and December 31. The bonds were sold for $124,477, priced to yield 12%. Legion records interest at the effective rate. Legion should r..
Triple Z Inc., a developer of radiology equipment, has stock outstanding as follows:- Calculate the dividends per share on each class of stock for each of the four years.
It's also important because it affects all of us, in one way or another, in our daily life. After R5 and R6 coverage of the UCC, illustrate what areas seemed familiar to you because of personal experiences?
At what amount should the portfolio be valued on the balance sheet and What amount, if any, should appear on the operating statement?
If the required rate of return is 12%, evaluate the project's desirability using The net present value method,The profitability index method
Compute the following: Cash receipts per books during August Cash disbursements per books during August and Unadjusted cash balance per ledger at August 31, 2016
The enacted tax rates are 30% in year 1 and 25% in year 2. In its year 1 income statement, what amount should Shear report as deferred income tax expense?
What is the EAC of two projects: project A, which costs $150 and is expected to last two years, and project B, which costs $190 and is expected to last 3 years
1.What is the difference between a principal and an agent for purposes of determining whether a company should report revenue on a gross or net basis?
question 1franks machine shop operates 250 days per year. frank sells 5000 units per year of his most popular item a
Many firms are relying on cloud computing, also known as “the cloud,” to perform key business functions. By moving transactional processing to the cloud, firms are exposing themselves to additional attacks as well as to tighter scrutiny from regulato..
Alexi Co. issued $3.40 million face amount of 6%, 10-year bonds on June 1, 2016. The bonds pay interest on an annual basis on May 31 each year. Independent of your answer to part a, assume that the proceeds were $3,044,000. Use the horizontal model t..
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