Answered: Select the correct choice below and…

Business

Finance

Select the correct choice below and fill in the answer box within your choice.

Intermediate Financial Management (MindTap Course List)

13th Edition

ISBN:9781337395083

Author:Eugene F. Brigham, Phillip R. Daves

Publisher:Eugene F. Brigham, Phillip R. Daves

Chapter22: Providing And Obtaining Credit

Section: Chapter Questions

Problem 3P: Del Hawley, owner of Hawleys Hardware, is negotiating with First City Bank for a 1-year loan of...

See similar textbooks

Related questions

Q: Perit Industries has $135,000 to invest. The company is trying to decide between two alternative…

A: Calculations are done in excel, so there is no intermediate rounding PV of Outflow = $135,000 PV of…

Q: Alan makes deposits to an account at the end of every year for 12 years. His first deposit is $300…

A: Effective Annual Rate: The effective annual rate of interest is the actual or the real rate of…

Q: Please correct the aswer

A: The current yield of the bond is referred to as the relationship between the annual coupon amount…

Q: Determine which alternative, if any, should be chosen based on Annual Worth method using 15% MARR.…

A: The present worth of a future cashflow is given by the formula Present value=Future value1+rn. Here,…

Q: The following provides information regarding Assets X and Y. Calculate the expected rate of return,…

A: Data given: Asset X Probability Return(%) 0.10 8 0.20 9 0.30 11 0.40 12 Asset Y…

Q: Distinguish between organisational types. Identify their key stakeholders and evaluate their need…

A: An organizational structure is that outline system where certain activities are directed in that…

Q: Mr John Week borrowed $ 2,400 at 1% per month payable in 24 equal end-of-the month payments. How…

A: The loan amount which is unpaid is needed to be paid in installments. If this amount will not paid…

Q: Let us assume that an investor can obtain an 80% LTV loan for a property valued at 500,000 at a 10%…

A: Cashflow means movement of cash in an organization. Movement can be positive or negative. Positive…

Q: A series of equal semi-annual payments of $1200 for 4 years is equivalent to what present amount at…

A: Semiannual payment (C) = $1200 Number of payments (t) = 8 (i.e. 4 years * 2) Annual interest rate =…

Q: What amount was invested at 3% if it earned an interest of P2,300 in 2 years and 3 months?

A: The interest earned on investment depends on the initial investment and interest rate and period of…

Q: For a bank that funds its fixed-rate loans with floating rate deposits whose cost varies with a the…

A: LIBOR: LIBOR is a benchmark that has traditionally been calculated using data provided by a group…

Q: A bond of Telink Corporation pays $120 in annual interest, with a $1,000 par value. The bonds…

A: Annual coupon payment = $120 Par Value = $1,000 Time period = 15 years Yield to maturity = 8%

Q: any is thinking in investing in one of two potential new products for sale. The projections are as…

A: IRR is the internal rate of return at which present value of cash flow is equal to initial…

Q: 5,027 is invested with 7% simple interest, find the exact interest using exact time and approximate…

A: Simple interest is simple interest without any need of compounding and in exact interest we need to…

Q: a. what is the inflation premium? b. what is the fair interest rate on Moore Corporation 30-year…

A: Inflation Premium: It is the compensation paid to the investor for taking on inflation risk. It is…

Q: Angela Montery has a five-year car loan for a Jeep Wrangler at an annual interest rate of 5.7% and a…

A: Data given: N=5 year Interest rate = 5.7% PMT= $595.50 After 3 years, Angela decides to purchase a…

Q: Fiona Trail is a recent retiree who is interested in investing some of her savings in corporate…

A: Coupon rate It is the amount investors expect as they hold the bond. Yield to Maturity It is the…

Q: A closed-end fund starts th value of $12. By year end, beginning of the year, the f premium to NAV.…

A: The following information has been provided in the question: Beginning Net Asset value =$12 Ending…

Q: Which of the follwing types of tax may not be shifted a. Percentage Tax b. Excise Tax c. Income Tax

A: The answer is Option c. Income Tax Income tax cannot be shifted.

Q: Your discount brokerage firm charges $8.20 per stock trade. How much money do you need to buy 220…

A: Brokerage charges = $8.20 Price per share = $29.42 Number of shares = 220 Amount need to buy 220…

Q: Ricardo wants to buy a large fishing boat so that he can go deep sea fishing. He needs $100,000 and…

A: Solution:- When some amount is borrowed, it can either be repaid as lump sum payment or in…

Q: iven that a firm's return on equity is 17 percent and management plans to retain 41 percent of…

A: Growth rate of the firm depends on the return on equity and retention ratio and very important…

Q: Discuss the methods of financing of retail business and the manner in which it will be raised.

A: Customers purchase things or services from retail firms for consumption, usage, or for their…

Q: Using the information provided in the following table, find the value of each asset. Cash Flow End…

A: Discounting is a technique through which present value (PV) of future cashflows is computed by using…

Q: You need to accumulate $10,000. To do so, you plan to make deposits of $1,450 per year - with the…

A: Future value of an annuity can be calculated as: = Annuity payment * FVAF (i%, n years)

Q: d) Calculate the P/E and P/BV multiples for both years. ANSWER 2020 2021 P/E P/BV

A: Data given: Description 2020 2021 Total Assets ($) 2705890 3008228 Total Liabilities ($)…

Q: Finance. Suppose that $6,000 is invested at 3.8% annual interest rate, compounded monthly. How much…

A: To calculate the future value we will use the below formula Future value = PV*(1+r/m)t*m Where PV…

Q: Define negative working capital. Is a negative working capital a sign of illiquidity or of…

A: Working capital is amount of temporary cash available for companies for timely payments of company…

Q: What is the total shareholder return?

A: Total return refers to a method which shows the relationship between the total return and current…

Q: Benton is a rental car company that is trying to determine whether to add 25 cars to its fleet. The…

A: The annual cash flow generated from the purchase of the car is depicted in the following table. The…

Q: 10. Individual C invested in a project with a payback period of 6 years. The project brings $18,000…

Q: An agricultural equipment was purchased at PhP1.75M has a resale value of PhP900000 whenever it is…

A: Payback period is the time taken by the investment to payback the cost of the investment. The…

Q: Optional deduction is computed as a.net income less net expenses b.gross sales multiply to 40%

A: The answer is option b. gross sales multiply to 40%

Q: A manufacturing company is trying to decic the two machines shown below. Determine machine should be…

A: A minimum acceptable rate of return is the profit an investor seeks to attain from a given…

Q: 5. Juan takes out a 3-year multi-purpose loan for P200,000 from a loaning institution. The annual…

A: The annual interest rate is 12%. So, the monthly interest rate will be 12%/12months = 1%. Monthly…

Q: The Canadian CPI is a Paasche price inde year weights). All things equal it will Overstate inflation

A: CPI is measure of consumer prices of goods and this is used to measure changes in prices of goods…

Q: Find the internal rates of return on a cash flow with deposit amounts of Ao = 40, A₁ = 120, A₂ 290,…

A: Net Cash Inflow at (t = 0) (N_1) = A_0 - B_0 = 40 - 240 = -200 Net Cash Inflow at (t = 1) (N_2) =…

Q: Please draw the Capital Market Line and the Security Market Line. Please write down their function…

A: CAPITAL MARKET LINE V/S SECURITY MARKET LINE…

Q: please answer all questions. as soon as possible please :) thank you Clare Jarrett has just…

A: “Since you have posted a question with multiple sub-parts, we will solve first three subparts for…

Q: A bond issued by Ford on May 15, 1997 is scheduled to mature on May 15, 2097. If today is November…

A: Bonds are the debt securities which are issued by the corporations or the government to raise the…

Q: Suppose, on a certain day in February, a speculator observes the following prices in the foreign…

A: The following information has been provided in the question: GBP/USD spot=1.6465 March…

Q: How does the money get paid out to the recipients?

A: Payments refer to those mechanisms which facilitate the settlement and clearing of monetary and…

Q: Using the same information in #5, compute for the Equity Shareholder's Net Income

A: The Equity share holders' income: The difference between the consolidated net income and the…

Q: How can she earn the time premium? I am very confused. How can she sell it without buying first?

A: Deep in the money is the option where expercise price is very lower than the the spot price. Time…

Q: eBook Problem Walk-Through Profit Margin and Debt Ratio Assume you are given the following…

A: Financial ratios are used to calculate various accounting and financial data. The main aim of the…

Q: aims of the Basel II capital accords

A: The Basel Committee on Bank Supervision (BCBS) established the Basel Accords, a series of three…

Q: What is the beta of the portfolio invested 20% in Formula and 80% in Dormula?

A: Capital asset pricing model (CAPM) is a model or method which is used by the company to define the…

Q: prominently in a headquarters, satellite office of the establishing agent or broker, by the…

A: given head quarters satellite office of the establishing agent or broker, by the supervising…

Q: A. Discuss main theories of financial intermediation and their rationale for the existence of…

A: “Hi There, Thanks for posting the questions. As per our Q&A guidelines, must be answered only…

Q: Manuel takes a 5-year loan that has 60 end of the month payments of L under the nominal annual…

A: Given that the loan i used to purchase bonds. Therefore, the principal amount of loan will be equal…

Question

PA
Use PMT=
to determine the regular payment amount, rounded to the nearest dollar. In terms of paying less in interest, which is more economical for a $240,000 mortgage: a 30-year fixed-rate at 10% or a 20-year fixed-rate at
-nt
9.5%? How much is saved in interest?
Select the correct choice below and fill in the answer box within your choice.
(Do not round until the final answer. Then round to the nearest thousand dollars.)
OA. The 20-year 9.5% loan is more economical. The buyer will save approximately $
OB. The 30-year 10% loan is more economical. The buyer will save approximately $
in interest.
in interest.

Expert Solution

This question has been solved!

Explore an expertly crafted, step-by-step solution for a thorough understanding of key concepts.

This is a popular solution!

SEE SOLUTION Check out a sample Q&A here

Step 1

Step 2

Step 3

Step 4

Step 5

Step 6

Step 7

Trending now

This is a popular solution!

Step by step

Solved in 7 steps

SEE SOLUTION Check out a sample Q&A here

Knowledge Booster

Learn more about

Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, finance and related others by exploring similar questions and additional content below.

Similar questions

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
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?
In terms of paying less in interest, which is more economical for a $140,000 mortgage: a 30-year fixed-rate at 9.5% or a 15-year fixed-rate at 9%? How much is saved in interest?... The buyer will save in interest approximately $... (Do not round until the final answer. Then round to the nearest thousand dollars.) Use the following formula to determine the regular payment amount. PMT=Prn1−1+rn−nt
In terms of paying less in interest, which is more economical for a $90,000mortgage: a 30-year fixed-rate at 9.5% or a 15-year fixed-rate at 9%? How much is saved in interest? Use the following formula to determine the regular payment amount. The buyer will save in interest approximately $... (Do not round until the final answer. Then round to the nearest thousand dollars.)
Use PMT formula to determine the regular payment amount, rounded to the nearest dollar. Consider the following pair of mortgage loan options for a $165,000 mortgage. Which mortgage loan has the larger total cost (closing costs + the amount paid for points + total cost of interest)? By how much? Mortgage A: 15-year fixed at 6.25% with closing costs of $1800 and 1 point. Mortgage B: 15-year fixed at 5.25% with closing costs of $1800 and 2 points. Choose the correct answer below, and fill in the answer box to complete your choice. (Do not round until the final answer. Then round to the nearest dollar as needed.) B. Mortgage A has a larger total cost than mortgage B by $_________.
Use PMT formula to determine the regular payment amount, rounded to the nearest dollar. Consider the following pair of mortgage loan options for a $165,000 mortgage. Which mortgage loan has the larger total cost (closing costs + the amount paid for points + total cost of interest)? By how much? Mortgage A: 15-year fixed at 6.25% with closing costs of $1800 and Mortgage B: 15-year fixed at 5.25% with closing costs of $1800 and Choose the correct answer below, and fill in the answer box to complete your choice. (Do not round until the final answer. Then round to the nearest dollar as needed.) A. Mortgage B has a larger total cost than mortgage A by $_________. B. Mortgage A has a larger total cost than mortgage B by $_________.
In a discount interest loan, you pay the interest payment up front. For example, if a 1-year loan is stated as $34,000 and the interest rate is 9.50%, the borrower “pays” 0.0950 × $34,000 = $3,230 immediately, thereby receiving net funds of $30,770 and repaying $34,000 in a year. A. What is the effective interest rate on this loan? (Do not round intermediate calculations. Enter your answer as a percent rounded to 2 decimal places.) B. What is the effective annual rate on a 1-year loan with an interest rate quoted on a discount basis of 19.50%? (Do not round intermediate calculations. Enter your answer as a percent rounded to 2 decimal places.)
Need Detailed answer with steps please 30. Considering the following information, what is the NPV if the borrower refinances the loan? Expected holding period: 3 years, Current loan balance: $100,000; Current loan interest: 7%; Current loan mortgage payment: $898.33; Remaining term on current mortgage: 15 years; New loan interest: 5.5%; New loan mortgage payment: $817.08; New loan term: 15 years; Cost of refinancing: $5,000. Assume that the opportunity cost is the interest rate on the new loan (5.5%). A. -$5,000.00 B. -$1,155.27 C. $3,844.73 D. $8,844.73
You have just purchased a new warehouse. To finance the purchase, you’ve arranged for a 33-year mortgage loan for 75 percent of the $3,330,000 purchase price. The monthly payment on this loan will be $16,600. a. What is the APR on this loan? (Do not round intermediate calculations and enter your answer as a percent rounded to 2 decimal places, e.g., 32.16.) b. What is the EAR on this loan?
For a $100,000 mortgage for 25 years at a 11.5% rate (monthly payments), find 4) If 8.685 points are charged, what is the dollar amount actually loaned? 5) if the loan is held for 25 years, what is the yield to the lender? - hint - subtract 8.685% from the $100,000 loan amount and enter as negative PV, then enter the monthly payment amount as pmt, enter 300 as n, and solve for %I (and multiply the answer by 12 to get the annual rate).
You have just purchased a new warehouse. To finance the purchase, you've arranged fora 38-year mortgage loan for 70 percent of the $3,380,000 purchase price. The monthlypayment on this loan will be $17,100. a. What is the APR on this loan? (Do not round intermediate calculations and enteryour answer as a percent rounded to 2 decimal places, e.g., 32.16.)b. What is the EAR on this loan? (Do not round intermediate calculations and enteryour answer as a percent rounded to 2 decimal places, e.g., 32.16.)
Assume that you have a thirty-year mortgage for $200,000 that carries an interest rate of 9.00%. The mortgage was taken three years ago. Since then, assume that interest rates have come down to 7.50%, and that you are thinking of refinancing. The cost of refinancing is expected to be 2.50% of the loan. (This cost includes the points on the loan.) Assume also that you can invest your funds at 6%. Should you refinance? Give mathematical explanation.