If a loan of L is repaid in one lump sum at the end of 20 years, the amount of interest paid is 5000 more than if the loan is repaid with 20 level payments at the end of each year. Assume the effective rate of interest is 7%. Find the loan amount L.

Q: at period of time could you pay back a loan of $3000 by making monthly payments of $110 if interest ...

A: Loans are paid by the equal amount of monthly payments these payments carry the payment of principal...

Q: he option is currently a.) In-the-money b.) At-the-money c.) Out-the-money

A: In the money option Strike price or exercise price is lower than current market price . For call opt...

Q: Suppose a company's equity is currently selling for $55 per share, with 4 million shares outstanding...

A: Market value of Equity (E) = no. of equity shares x market price per share = 4 million * $55 = $220 ...

Q: If you pay $1000 for a $1000 bond that pays annual “coupon interest” equal to 5% and matures in 3 ye...

A: Bond price implies for the consideration paid by an investor for acquiring bond. In provided case, b...

Q: The Black-Scholes model is used by Bulldogs Inc. to value call options on the stock of National Inc....

A: Black and scholes model: It is the model used to calculate the value of a call option as well as put...

Q: Jasmine May is a 45-year-old academic dean who has just inherited a large sum of money. Having knowl...

A: DURATION: It is the time taken by the bond to recover its investment made in the bond through coupon...

Q: Based on this information, the breakeven points for Bulldogs Co. and National Co. are:   a. 5 millio...

A: Breakeven point is that level of sales revenue at which business is only recovering it's fixed costs...

Q: The formula of which of the following considers the percentage change in price? a. Total expected yi...

A: Percentage change in price Percentage change in price involves two prices of two different periods. ...

Q: You are an investor who is interested in purchasing AC shares which is currently trading at a price ...

A: Growth rate  (g) = 3% Required return (r) = 8% Expected dividend (D1) = P25

Q: If you had two investments to choose from, one a perpetuity that pays $100/year forever, or the othe...

A: Alternative 1: Perpetuity that pays $100/year forever Alternative 2: Bond that pays interest of $10...

Q: Assumes stock markets are both deep (many buyers and sellers) and liquid (easy to buy or sell). As s...

A: Stock market is the marketplace where stocks are bought and sold by traders. The volatility of the s...

Q: The Longganisa Builders Co. agreed to pay P100,000.00 for a new bulldozer with an expected life of 2...

A: Increase in annual earnings (A) = P 12000 r = 12% n = 20 years  

Q: Red Company's book value per share is P25, the market to book value ratio is 1.5. If the earnings pe...

A: Answer - Step 1 - Calculation of Market Value of Shares - Market to book value ratio = Market Price ...

Q: has accumulated $6200 by saving $116 every month for four years, what nominal annual rate of interes...

A: The amount deposited in account grow to large amount after deposits are made for long time with effe...

Q: 11.  Amina has a jewellery business in a well-established shop. Her most recent income statement sho...

A: Solution:- Sales implies the revenue generated by an entity from its primary operations, while gross...

Q: Texas Farm Corporation is considering two projects of machinery that perform the same task. The requ...

A: Net Present Value: Net present value (NPV) is the excess of present value of cash inflows over the p...

Q: Suppose there are two possible states for the economy over the next year, boom or bust, and these tw...

A: Risk management is used to study the uncertainties in the market and to take corrective action to mi...

Q: DGG Inc. has sold 2,000 shares of P200 par, 4% preferred stock at an issue price of P184 per share. ...

A: Share price: Share price is the current market price of the share. It is the price of the share at w...

Q: Today, one unit of Mexican Peso can purchase 3.20 units of US Dollar and it is predicted that the US...

A: Spot rate 1 Mexican Peso = 3.20 US Dollar Depreciation in US Dollar = 10% Exchange rate after 2 mont...

Q: 7. Carlos Primero is a 30-year old employee earning P400,000 per annum. He intends to retire at the ...

A: We’ll answer the first question since the exact one wasn’t specified. Please submit a new question s...

Q: Increasing debt can be used as part of the financial strategy of the firm to increase ROE decrease c...

A: Debt is a liability which allows an entity to get immediate funds for their requirement and make a l...

Q: Consider 10.0 percent Swiss franc/U.S. dollar dual-currency bonds that pay $666.67 at maturity per S...

A: Implicit exchange rate = Swiss franc/U.S. dollar dual-currency bonds 

Q: Suppose Franco wants to have P10,000,000 to retire 45 years from now, how much would she have to inv...

A: Present Value:  The present value is the value of cash flow stream or the fixed lump sum amount at t...

Q: 3. Find the amount (in $) of interest and the maturity value of the loans. Use the formula  MV = P ...

A: Solution:- When an amount is invested somewhere, it earns interest and the amount receivable at matu...

Q: National Inc. has 100 bonds outstanding with maturity value each of P1,000. The nominal required rat...

A: Par value of bond (FV) = P1000 Coupon rate = C Semi annual coupon amount (P) = 1000*C/2 = 500C Years...

Q: National Co. forecasts that its earnings per share will be P4.00 this year.  The company has 500,000...

A: The capital structure of company consists of debt and equity. Dividend are paid out of net income an...

Q: Bulldogs Inc. 4-year long-term bonds currently yield 11%.  The real risk-free rate is 3%.  The matur...

A: The yield on the bond is sum of risk free rate and inflation and maturity risk premium and default a...

Q: Boots and Shoes inc has sales of $7525, total assets of $3215 and a debt equity ratio of 1.30. If it...

A: Sales = $7525 Total assets = $3215 Debt to equity ratio = 1.30 Equity to asset ratio  = 1/(1+Debt to...

Q: er to accumulate ₱100,000 in 3 years and 6 months, how should one invest today at 9% compounded semi...

A: The today value which is equivalent to the future payment includes payment without  interest that wa...

Q: 13. Christopher Flores borowed a certain principal from bank with interest at 7% per annum. After 3....

A: Since specifically solution to Question 13 is asked, so the given solution is for Question 13. Solut...

Q: An indium-gallium-arsenide-nitrogen alloy developed at Sandia National Laboratory is said to have po...

A: Rate of return- the rate that will make present value of all extra revenue equal to investment.   Da...

Q: Evaluate the two strategies adopted by financial institution to manage their risks.

A: Note: As you asked to provide the solution of part iii), we are providing the solution of part iii) ...

Q: 12 A debtor borrowed P12.700 and after 4 vears, paid back the loan with an 8% interest. How much was...

A: Hi! Thank you for the question, As per the Honor Code, we are allowed to answer one question in case...

Q: What factors to be considered in choosing either bonds, preference shares or ordinary shares as the ...

A: A company can raise capital by various means – by issuing bonds or by issuing preference shares or b...

Q: An investment that cost P20,000 will provide a return of 12% compounded quarterly. For how long will...

A: Investment (PV) = P20,000 Interest rate = 12% Effective annual interest rate (r) = [1+(0.12/12)]12-1...

Q: Firms generally decide to call their bonds when interest rates   rise drop remain the same there is ...

A: When the bond interest rate rises, the firms are at an advantage as they have been able to secure fi...

Q: A manufacturing plant installed a new boiler at a cost of P150, 000 and estimated to have a useful l...

A: Capitalized cost is the present value of the constant annual cost for infinite period.. Examples of ...

Q: udy has just completed the development of a better face shield for health workers. The new product i...

A: Annual revenue = $150,000 Investment = $9000.34 Life = 5 years Salvage value = $3000 Working capital...

Q: Three years ago Samia issued 10 year bonds that pays 5% coupon annually and sells for $1045. Calcula...

A: One of the most important factors in bond valuation is yield. Bonds are compared based on their yiel...

Q: Repairing a leaky roof after a hail storm is an example of maintenance. O routine custodial O correc...

A: Maintenance refers to the process of preserving something so that it continues to work in the same m...

Q: Can you help me with this please? Katrina purchased a dining room set for $1500 down with the balanc...

A: Monthly payment (P) = $198.12 Interest rate = 12% Monthly interest rate (r) = 12%/12 = 1% Total mont...

Q: Economic Profit (or Economic Value Added) is created

A: Economic profit shows the difference between the revenue generated from outputs after meeting all th...

Q: 11. A debt of P29,000 bears simple interest at 7½% per annum. If it is repaid after 5 years, how muc...

A: Since you have asked multiple question, we will solve the first question for you. If you want any sp...

Q: B. REDRDER POinT? GIven: VEAD TimE = 1 WEEK AUERAGE USAGE = 7,000 units per uk. THERE ARE 50 WORKING...

A: Solution:- Re-order point is the point which tells that when should a firm places next order to its ...

Q: 15. Compute the principal (in $) for the loan. Use ordinary interest when time is stated in days. P...

A: The principal amount can be calculated with the help of simple interest function

Q: Your company is evaluating a switch from a cash policy to a net 30 policy. The price per unit is $49...

A: Here, Selling Price per unit (P) = $49 Variable cost per unit (V) = $20 Sales units (S) = 100 units ...

Q: A certain machinery costs P 50,000 lasts 12 years with a salvage value of P 5,000.  If the owner dec...

A: Depreciation is the allocation of cost of asset over the useful period of life. Under double declini...

Q: 9 For the next four years, the one-year forward rates are estimated to be: Year 1 3 4. Forward Rate ...

A: Forward rate is the interest rate of the financial transaction that will take place in the future. T...

Q: f the firm's dividend policy was to pay P0.25 per share each period except when earnings exceed P1.5...

A: Dividend per share Net earnings or profit of a firm is used to retain in business itself or is distr...

Q: sume tilat gets sick, her medical bills will amount to $3600. She has a wealth of $10,000. Suppose s...

A: In economics, utility generally refers to the pleasure or satisfaction that consumers get from using...

Mortgages

A mortgage is a formal agreement in which a bank or other financial institution lends cash at interest in return for assuming the title to the debtor's property, on the condition that the obligation is paid in full.

Mortgage

The term "mortgage" is a type of loan that a borrower takes to maintain his house or any form of assets and he agrees to return the amount in a particular period of time to the lender usually in a series of regular equally monthly, quarterly, or half-yearly payments.