Problem 6-18 Interest costs under alternative plans [LO6-3]Carmen's Beauty Salon has estimated monthly financing requirements for the next six months as follows:$8,100AprilМayJanuary$8,100February2,1009,1004,100March3,100JuneShort-term financing will be utilized for the next six months. Projected annual interest rates are:AprilМay12.0%JanuaryFebruaryMarch5.0%6.0%12.0%9.0%June12.0%a. Compute total dollar interest payments for the six months. (Round your monthly interest rate to 2 decimal places when expressedas a percent. Round your interest payments to the nearest whole cent.)Total dollar interest payments b-1. Compute the total dollar interest payments if long-term financing at 12 percent had been utilized throughout the six months?(Round your monthly interest rate to 2 decimal places when expressed as a percent. Round your interest payments to the nearestwhole cent.)Total dollar interest paymentsb-2. If long-term financing at 12 percent had been utilized throughout the six months, would the total-dollar interest payments be largeror smaller than with the short-term financing plan?O SmallerO Larger

Given are the annual interest rates which should be converted into monthly interest rate and find…

Answered: Problem 6-18 Interest costs under…

Essentials Of Investments

11th Edition

ISBN:9781260013924

Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.

Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.

Chapter1: Investments: Background And Issues

Section: Chapter Questions

Problem 1PS

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Qw.12.a A fully amortizing mortgage loan is made for $104,000 at 6 percent interest for 20 years. Required: a. Calculate the monthly payment for a CPM loan. b. What will the total of payments be for the entire 20-year period? Of this total, how much will be the interest? c. Assume the loan is repaid at the end of eight years. What will be the outstanding balance? How much total interest will have been collected by then? d. The borrower now chooses to reduce the loan balance by $5,400 at the end of year 8. (1) What will be the new loan maturity assuming that loan payments are not reduced? (2) Assume the loan maturity will not be reduced. What will the new payments be?
Problem 6-15 Calculating APR [LO4] Elliott Credit Corp. wants to earn an effective annual return on its consumer loans of 15.2 percent per year. The bank uses daily compounding on its loans. What interest rate is the bank required by law to report to potential borrowers? (Use 365 days a year. Do not round intermediate calculations and enter your answer as a percent rounded to 2 decimal places, e.g., 32.16.)
(Related to Checkpoint 5.6) (Solving for i) At what annual interest rate, compounded annually, would $520 have to be invested for it to grow to $1 comma 977.46 in 12 years? Question content area bottom Part 1 The annual interest rate, compounded annually, at which $520 must be invested for it to grow to $1 comma 977.46 in 12 years is
Problem 5-30 Calculating Annuities Due [LO 2] You want to buy a new sports car from Muscle Motors for $44,200. The contract is in the form of a 60-month annuity due at an APR of 5.95 percent. What will your monthly payment be?
Q 10 You wish to buy a $9,100 dining room set. The furniture store offers you a 2-year loan with an APR of 9 percent. What are the monthly payments? (Do not round intermediate calculations and round your final answer to 2 decimal places.) PAYMENT________ PER MONTH How would the payment differ if you paid interest only? (Do not round intermediate calculations and round your final answer to 2 decimal places.) PAYMENT________ PER MONTH
Q 12 A loan is offered with monthly payments and a 16.25 percent APR. What’s the loan’s effective annual rate (EAR)? (Do not round intermediate calculations and round your final answer to 2 decimal places.) EFFECTIVE ANNUAL RATE?
Pm.6 You want to buy a new sports car from Muscle Motors for $55,000. The contract is in the form of an annuity due for 48 months at an APR of 7.00 percent. What will your monthly payment be? Multiple Choice $1,335.59 $1,283.22 $1,309.41 $1,317.04 $1,243.93
PROBLEM 10 A developer deposits $84,720 for 7 months and earns $4055.46 in simple interest.Find the interest rate.
(Ch 11 #9) There is a loan obligation to pay $1000 one year from today and another $1000 two years from today. Assuming the annual effective rate of interest is 10%, find the following: a) Macaulay duration of the loan. b) Modified duration of the loan. c) Convexity of the loan.
36- Suppose that a loan of R$6,000,000.00 must be paid monthly as follows: From the 10th to the 100th month, 10 installments of R$426,143.00 From the 110th to the 130th month, 3 installments of R$3,621,378.00 What is the monthly interest rate built into this plan?
Chapter 10 Discussion Q2 A perpetuity will pay $900 per year, starting five years after the perpetuity is purchased. What is the present value (PV) at time 0, given that the interest rate is 11%? Show your steps. A) $2695 B) $4312 C) $5390 D) $3234
Problem 17-2 (Algo) PBO calculations; present value concepts [LO17-3] Sachs Brands's defined benefit pension plan specifies annual retirement benefits equal to 1.4% × service years × final year's salary, payable at the end of each year. Angela Davenport was hired by Sachs at the beginning of 2007 and is expected to retire at the end of 2041 after 35 years' service. Her retirement is expected to span 18 years. Davenport's salary is $92,000 at the end of 2021 and the company's actuary projects her salary to be $290,000 at retirement. The actuary's discount rate is 6%. (FV of $1, PV of $1, FVA of $1, PVA of $1, FVAD of $1 and PVAD of $1) (Use appropriate factor(s) from the tables provided.) Required:2. Estimate by the projected benefits approach the amount of Davenport's annual retirement payments earned as of the end of 2021.3. What is the company's projected benefit obligation at the end of 2021 with respect to Davenport? (Do not round intermediate calculations. Round your final answer…

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