Rounding in the calculation of monthly interest rates is discouraged. Such rounding can lead to answers different from those presented here. For long- term loans, the differences may be pronounced. Use this Monthly Payments for Long-Term Loans Rule of Thumb to estimate the monthly payment on a loan of $150,000 at an APR of 6% over a period of 30 years. The monthly payment is at least $ eflook

Rounding in the calculation of monthly interest rates is discouraged. Such rounding can lead to answers different from those presented here. For long- term loans, the differences may be pronounced. Use this Monthly Payments for Long-Term Loans Rule of Thumb to estimate the monthly payment on a loan of $150,000 at an APR of 6% over a period of 30 years. The monthly payment is at least $ eflook

Pfin (with Mindtap, 1 Term Printed Access Card) (mindtap Course List)

7th Edition

ISBN:9780357033609

Author:Randall Billingsley, Lawrence J. Gitman, Michael D. Joehnk

Publisher:Randall Billingsley, Lawrence J. Gitman, Michael D. Joehnk

Chapter7: Using Consumer Loans

Section: Chapter Questions

Problem 7FPE: Calculating interest and APR of installment loan. Assuming that interest is the only finance charge,...

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Del Hawley, owner of Hawleys Hardware, is negotiating with First City Bank for a 1-year loan of 50,000. First City has offered Hawley the alternatives listed here. Calculate the effective annual interest rate for each alternative. Which alternative has the lowest effective annual interest rate? a. A 12% annual rate on a simple interest loan, with no compensating balance required and interest due at the end of the year b. A 9% annual rate on a simple interest loan, with a 20% compensating balance required and interest due at the end of the year c. An 8.75% annual rate on a discounted loan, with a 15% compensating balance d. Interest figured as 8% of the 50,000 amount, payable at the end of the year, but with the loan amount repayable in monthly installments during the year
(1) What is the value at the end of Year 3 of the following cash flow stream if the quoted interest rate is 10%, compounded semiannually? (2) What is the PV of the same stream? (3) Is the stream an annuity? (4) An important rule is that you should never show a nominal rate on a time line or use it in calculations unless what condition holds? (Hint: Think of annual compounding, when INOM = EFF% = IPER.) What would be wrong with your answers to parts (1) and (2) if you used the nominal rate of 10% rather than the periodic rate, INOM/2 = 10%/2 = 5%?
Calculating interest and APR of installment loan. Assuming that interest is the only finance charge, how much interest would be paid on a 5,000 installment loan to be repaid in 36 monthly installments of 166.10? What is the APR on this loan?
Warning: Rounding in the calculation of monthly interest rates is discouraged. Such rounding can lead to answers different from those presented here. For long-term loans, the differences may be pronounced. Use the Estimation Rule for Long-Term Loans to estimate the monthly payment on a loan of $200,000 at an APR of 6% over a period of 25 years. The monthly payment is at least $
Warning: Rounding in the calculation of monthly interest rates is discouraged. Such rounding can lead to answers different from those presented here. For long-term loans, the differences may be pronounced. Several years ago Bill got a home mortgage of $137,000 with a term of 30 years at an APR of 9%. Use the Estimation Rule for Long-Term Loans to estimate his monthly payment. $ Compare this estimate with what the monthly payment formula gives. (Round your answer to the nearest integer.) The actual monthly payment is about $ greater than the estimated payment.
Warning: Rounding in the calculation of monthly interest rates is discouraged. Such rounding can lead to answers different from those presented here. For long-term loans, the differences may be pronounced. You borrow $21,000 with a term of two years at an APR of 5%. Use the Estimation Rule for Short-Term Loans to estimate your monthly payment. (Round your answer to the nearest cent.) $ Compare this estimate with what the monthly payment formula gives. The actual monthly payment is about $46 less than the estimated payment.The actual monthly payment is equal to the estimated payment. The actual monthly payment is about $46 greater than the estimated payment
Rounding in the calculation of monthly interest rates is discouraged. Such rounding can lead to answers different from those presented here. For long-term loans, the differences may be pronounced. You find that the going rate for a home mortgage with a term of 30 years is 7% APR. The lending agency says that based on your income, your monthly payment can be at most $780. How much can you borrow? (Round your answer to the nearest cent.)
Rounding in the calculation of monthly interest rates is discouraged. Such rounding can lead to answers different from those presented here. For long-term loans, the differences may be pronounced.To buy a car, you borrow $25,000 with a term of five years at an APR of 6%. What is your monthly payment? (Round your answer to the nearest cent.)$ How much total interest is paid? (Round your answer to the nearest cent.)
Rounding in the calculation of monthly interest rates is discouraged. Such rounding can lead to answers different from those presented here. For long-term loans, the differences may be pronounced.Assume that you take out a $4000 loan for 30 months at 8% APR. How much of the first month's payment is interest? (Round your answer to the nearest cent.)$
An advertised monthly lending rate of 9% is about 11% per year. This difference between an advertised rate and the annualized rate is based on finer TVM details that may be overlooked by borrowers. Discuss how you may have used TVM in a recent investment or loan decision and explain the TVM involved in your transaction. If you have not used TVM in the past financial transactions what practical TVM application would you expect to encounter in your future.
Banks sometimes quote interest rates in the form of “add-on interest.” In this case, if a 1-year loan is quoted with an interest rate of 8.0% and you borrow $1,000, then you pay back $1,080. But you make these payments in monthly instalments of $108 each. 1) What is the true APR on this loan? 2) What is the effective annual rate on the loan? Please show workings with formulas.
Banks sometimes quote interest rates in the form of “add-on interest.” In this case, if a 1-year loan is quoted with an interest rate of 8.0% and you borrow $1,000, then you pay back $1,080. But you make these payments in monthly instalments of $108 each.a) What is the true APR on this loan?b) What is the effective annual rate on the loan?