Ms. Esperanto obtained a $40,900 home equity loan at 8.3% compounded monthly. (Do not round intermediate calculations. Round the PMT and final answers to 2 decimal places.) a. What will she pay monthly if the amortization period is 10 years? Payment $ per month b. How much of the payment made at the end of the fourth year will go towards principal and how much will go towards interest? Principal $ Interest $ c. What will be the balance on the loan after four years?
Risk and return
Before understanding the concept of Risk and Return in Financial Management, understanding the two-concept Risk and return individually is necessary.
Capital Asset Pricing Model
Capital asset pricing model, also known as CAPM, shows the relationship between the expected return of the investment and the market at risk. This concept is basically used particularly in the case of stocks or shares. It is also used across finance for pricing assets that have higher risk identity and for evaluating the expected returns for the assets given the risk of those assets and also the cost of capital.
Ms. Esperanto obtained a $40,900 home equity loan at 8.3% compounded monthly. (Do not round intermediate calculations. Round the PMT and final answers to 2 decimal places.)
a. What will she pay monthly if the amortization period is 10 years?
Payment $ per month
b. How much of the payment made at the end of the fourth year will go towards principal and how much will go towards interest?
| Principal | $ |
| Interest | $ |
c. What will be the balance on the loan after four years?
Balance $
d. How much interest did she pay during the fourth year?
Interest paid $
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