Question

Asked Oct 13, 2019

46 views

"Assume you graduate with $31,300 in student loans with an interest rate of 5.25% compounded annually. If you want to have this debt paid off in full within three years, how much must you pay each month?"

I know that the answer is $941.61 but I cannot seem to figure it out how to get there.

Step 1

The loan amount consists present value of all future payments.

It is given that,

Loan amount is $31,300.

Annual interest rate is 5.25%.

Number of years is 3. So, total number of payments would be 36.

Step 2

Monthly interest rate is calculated below:

Step 3

The following expression can be used to...

Tagged in

Find answers to questions asked by student like you

Q: A current highway project is estimated to have an average of $1,000,000 in annual maintenance costs ...

A: Calculate the capitalized equivalent of the perpetual annual maintenance costs as follows:

Q: Makers Corp. had additions to retained earnings for the year just ended of $415,000. The firm paid o...

A: The question has 6 sub-parts to be answered. As per guidelines, we must answer first two sub-parts w...

Q: An organization's primary operations occur in the U.S. and Europe. However, it has relocated its cas...

A: Outsourcing: A business practice under which company hire a third party to complete a specific task ...

Q: You are serving on a jury. A plaintiff is suing the city for injuries sustained after a freak street...

A: Calculate the annual percentage rate (APR) as follows:

Q: In 2021, Usher Sports Shop had cash flows from investing activities of $420,000 and cash flows from ...

A: Operating cash flow:The amount, which a firm obtains from its day-to-day business activities like ma...

Q: Please show all equations and work as needed. Make the correct answer clear. If possible, please typ...

A: Free cash flow is a perpetuity C = $ 10 mn growing at g = 5%;Tax rate = T = 25%;Cost of debt, Kd = 6...

Q: What are international finance?

A: International finance:It is a monetary transaction which occurs among two or more countries. It stud...

Q: Income Statement Bullseye, Inc.'s 2018 income statement lists the following income and expenses: EBI...

A: Earnings (or net income) are determined after a firm pays off its interests and taxes from the earni...

Q: How does a high rate of inflation affect money in all its different roles?

A: Inflation: Inflation is a rate at which the price of the products and services rises. It frequently ...

Q: How long would it take an investment to double under each of the following conditions? (a) Interest ...

A: (a)Interest Rate = 3.3%Type of Compounding = MonthlyNumber of Compounding = 12 Assumption:Present Va...

Q: If mutually exclusive projects with normal cash flows are being analyzed, the net present value (NPV...

A: Net Present Value (NPV) is the method by which an investor accepts or reject the project by calculat...

Q: Recently, More Money 4U offered an annuity that pays 5.1% compounded monthly. If $827 is deposited i...

A: Calculate the future value as follows:MS-Excel --> Formulas --> Financials --> FV

Q: During the year, Belyk Paving Co. had sales of $2,600,000. Cost of goods sold, administrative and se...

A: Calculate the net income as follows:

Q: What is the future value of $3,100 in 17 years assuming an interest rate of 8.4 percent compounded s...

A: Given,Present Value (PV) = $3,100Rate of Interest (r) = 8.4% or 0.084Time Period (t) = 17 yearsType ...

Q: Expected Return, Variance, Std. Deviation and Cofficient of Variation:Magee Inc.'s manager believes ...

A: The expected return Re is as shown on the white board. Pi = Probability of state i; Ri is the return...

Q: New-Project Analysis Madison Manufacturing is considering a new machine that costs $350,000 and woul...

A: As per the authoring guidelines, we should answer first question only if multiple questions posted u...

Q: Sure Tea Co. has issued 4.2% annual coupon bonds that are now selling at a yield to maturity of 5.60...

A: Face Value of Bond = $1,000Coupon Rate = 4.2%Coupon Payment = $1,000 × 4.2% = $42Current Yield = 5.5...

Q: Even though most corporate bonds in the United States make coupon payments semiannually, bonds issue...

A: Calculation of Current Price of Bond:The current price of bond is €884.56.Excel Spreadsheet:

Q: What is the future value of a $500 annuity payment over four years if interest rates are 8 percent? ...

A: Calculate the future value as follows:

Q: Mr. Jones has a 2-stock portfolio with a total value of $550,000. $185,000 is invested in Stock A a...

A: The formula to calculate the expected risk on portfolio (standard deviation of the portfolio return)...

Q: Assume that your starting salary will be $55,000 per year, and assume that you have no additional in...

A: Gross Annual income = A = $$ 55,000Tax rate, T = 27%Net annual income, B = A x (1 - T) = $ 55,000 x ...

Q: Assume ABC shares have a market capitalization of $50 million. The company is expected to pay a divi...

A: WACC refers to weighted average cost of capital. It is the rate that a firm needs to pay (on an aver...

Q: Elliott Credit Corp. wants to earn an effective annual return on its consumer loans of 17.1 percent ...

A: Click to see the answer

Q: You are going to invest in a stock mutual fund with a front-end load of 4.5 percent and an expense r...

A: Calculate the annual return as follows:Investment in stock mutual fund with return is 4.5% and expen...

Q: Interest rates on 4-year Treasury securities are currently 5.6%, while 6-year Treasury securities yi...

A: Pure expectation theory allows an investor to use long-term interest rates to predict the future int...

Q: A security that is selling for $3,000 and promises to pay annual interest or $250 forever would have...

A: Calculation of annual yield:Answer:The annual yield of security is 8.333%.

Q: Ten years ago the Templeton Company issued 30-year bonds with a 10% annual coupon rate at their $1,0...

A: We will make use of the RATE function in excel to calculate the yield to call. This yield to call is...

Q: Mildly impressed, your two year old takes a break to ponder compounding. After lunch, a nap and two ...

A: The number of compounding periods for annual has 1 compounding period, semi-annual has 2 compounding...

Q: Which of the following is true of the current state of financial regulation for financial institutio...

A: Statement 1 is not correct because risk functions in bank will be fundamentally different from the w...

Q: In July 1993, the Walt Disney Company's common stock was trading in the range $36 to $41 per share. ...

A: Part (a)Only way this question can be solved is by applying risk premium approach.Expected rate of r...

Q: Which of the following should be considered when a company estimates the cash flows used to analyze ...

A: The correct answer is the last option i.e. option E. The new project is expected to reduce sales of ...

Q: Lydic Corporation has bonds on the market with 15.5 years to maturity, a YTM of 7.6 percent, a par v...

A: Calculation of annual coupon rate: The annual coupon rate is 8.30%.Excel spreadsheet:

Q: If Roten Rooters, Inc., has an equity multiplier of 1.27, total asset turnover of 2.10, and a profit...

A: Calculate the return on equity (ROE) as follows:

Q: True or False: The following statement accurately describes how firms make decisions related to issu...

A: Answer for True/ False statement is as follows:False: Flotation costs are additional costs associate...

Q: Assume the following information for a car note: Original loan amount = $23,500 Annual interest rate...

A: Calculation of Principal Balance:The principal balance on the loan after six months is $17,939.55.Ex...

Q: Brandon is an analyst at a wealth management firm. One of his clients holds a $7,500 portfolio that ...

A: Question: 1Calculation of Portfolio’s Required Return Change:The Portfolio’s Required Return Change ...

Q: A privately run, for-profit, prison is considering ways in which it can cut its monthly costs and th...

A: Calculate the Present value as follows:

Q: Need help with NPV and IRR

A: Reinvestment Rate = 3% or 0.03Cash Flow = Old Cash Flow × (1 + Reinvestment Rate) Calculation of NPV...

Q: Use an Excel function to find the expected rate of return based on the following 5 years of historic...

A: Calculate the expected return as follows:

Q: An analyst uses a two-stage variable growth model to estimate the value of Old Maid Company's common...

A: d)Computation of value of the stock attributable to years 4 and beyond is as follows:

Q: For each of the following annuities, calculate the annual cash flow. (Enter rounded anware adirected...

A: We can find the annual payment using PMT function of excel. The PMT function works with following in...

Q: You are interested in buying a brand new jalopy and expect the purchase price to be $19,000. The car...

A: Purchase Price = $19,000Down Payment = $1,000 Calculation of Loan Amount (PV):

Q: One of the most important components of stock valuation is a firm's estimated growth rate. Financial...

A: Calculate the growth rate as follows:

Q: When is the best time to buy euros with us dollar

A: The fact is that there is no single time is the best to buy the euros with US dollars as the foreign...

Q: Helga had AGI of $135,000 in 2018. She donated corporate stock with a basis of $28,000 to a qualifie...

A: Part (a) Basis = $ 28,000; Fair Value = $ 26,000Period of holding: From June 15, 2017 till April 3, ...

Q: Suppose that $1000 is invested now, $2000 is invest two years from now, and $3000 is invested four y...

A: Calculate the future value as follows:

Q: The corporate valuation model, the price-to-earnings (P/E) multiple approach, and the economic value...

A: Calculate the free cash flows as follows:

Q: Dudley Hill Golf Club's market-to-book ratio is currently 3.4 times and the PE ratio is 7.20 times. ...

A: Market to book value ratio = P / B = 3.4PE ratio = P/E = 7.20P = $ 33.60 per share

Q: Last Tuesday, Green Caterpillar Garden Supplies Inc. lost a portion of its planning and financial da...

A: Calculation of initial investment and NPV:Answer:Initial investment is $9,987,714 and NPV is $555,73...

Q: There will likely be a difference between your calculation of the Company’s intrinsic value and its ...

A: Intrinsic value is the true or inherent value of a company. It is a fundamental value which is deriv...