You are loaned $300 at the end of years 1, 2, and 3. You pay this loan back with payments of X at the end of year 5, and $300 at the end of years 4, 6, and 7. Find X if the effective annual interest rate i = .07

You are loaned $300 at the end of years 1, 2, and 3. You pay this loan back with payments of X at the end of year 5, and $300 at the end of years 4, 6, and 7. Find X if the effective annual interest rate i = .07

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 6FPE

See similar textbooks

Related questions

Q: Suppose you borrow $8500 for a term of five years at a simple interest and 8.25% APR. how much is…

A: Interest is the cost of borrowing the money.

Q: You are loaned $300 at the end of years 1 and 2, and loaned X at the end of year 3. You pay this…

A: We will use the concept of time value of money. Here each payment is made in a different time period…

Q: $5000 that you have to pay in 7 annual installments of $1100 each, the first one at the end of the…

A: The given problem relates to RATE function in excel. RATE function computes interest rate for no. of…

Q: In one instance, a financial institution loaned you $20,000 for two years at an apr of 4.75% for…

A: Interest refers to the cost of borrowing money from the lender.

Q: you borrow $2,700 at 8% simple interest per year for five years, how much will you have to repay at…

A: interest =p×r×t100where,r=rate of interestp=principal t=years

Q: a man borrows money from a bank . he receives the money in 5 equal annual installment of X…

A: The time worth of cash (TVM) is the idea that cash you have now is worth more than the…

Q: You plan to borrow $49,400 at a 7.3% annual interest rate. The terms require you to amortize the…

A: Yearly installments= $49400* R* (1+R)^n/((1+R)^N-1) = 49400* 7.3%* (1+7.3%)^7/((1+7.3%)^7-1) = 9262

Q: What is the effective interest rate charged to a loan of P5,000 paid after 5 years amounting to…

A: Effective Rate of Interest is the percentage return on the amount invested into any return paying…

Q: The following loan is a simple interest amortized loan with monthly payments. (Round your answers to…

A: Using excel PMT function

Q: Find the interest paid on a loan of $2,700 for one year at a simple interest rate of 11% per year.…

A: Simple interest = Principle × rate × time

Q: If you borrow $25,000 at an interest rate of 6%, compounded annually, with the repayment schedule as…

A: We need to discount all the future cash flows from year 1-4 and year 5-9 so that the total sum of…

Q: Required: a. If the borrower makes interest-only payments for three years, what will the payments…

A: Amortization: It is the process of paying the loan by making periodic and regular payments. These…

Q: a. If you borrow $1,100 and agree to repay the loan in six equal annual payments at an interest rate…

A: Part (a)Let the annual payment be P. Interest rate, i = 11%; n = period = number of payment =…

Q: The following loan is a simple interest amortized loan with monthly payments.($) 6000 , (7 1/2 %), (…

A: a) Computation of monthly payment:

Q: Find the interest rates earned on each of the following: A. You borrow $700 and promise to pay back…

A: A. To determine the rate of interest earned: Loan = PV = 700 Future Value = FV = 749 Term = n=1 year…

Q: Sally Johnson loaned a friend $10,000 at 15% interest, compounded annually. The loan will be paid in…

A: Interest rate=15%Inflation=3%Loan amount=$10000

Q: Assuming that the interest is the only finance charge, how much interest would be paid on a 5,000…

A: Interest is the amount paid on a loan by the borrower to the lender above the principal amount to…

Q: Find the APR of the loan given the amount of the loan the number and types of payment in the add-on…

A: Annual percentage rate (APR) : It refers to the yearly generated interest by a Principal amount that…

Q: Your uncle lends you $2,000 less $100 (interest at 5 percent), and you receive $1,900. Use the APR…

A: Here Future value = 2000 present value is 1900 Time is 1 year we need to find Rate

Q: The following loan is a simple interest amortized loan with monthly payments. $155000, 9 1/2%, 30…

A: A type of loan in which the borrower has to make a schedule for the periodic payment regarding both…

Q: The following loan is a simple interest amortized loan with monthly payments. $5000, 7 1/2%, 4…

A: Answer: Principal balance = $ 5000 rate = 7.5% time = 4 years

Q: an can be repaid in two ways: (i) a perpetuity-due with annual payment $1000; (ii) a 3-year…

A: Loans are paid by the equal annual installments these carry the payment for interest and payment for…

Q: Suppose that the mortgage loan described in question 10 is a one-year adjustable rate mortgage…

A: To Find: New Monthly Payment

Q: Find the annual simple interest rate of a loan, where $900 is borrowed and where $1008 is repaid at…

A: Simple interest is the type of interest that is calculated on the original amount of the loan and…

Q: If the proceeds of a loan of P12,450 will be paid with P12,840 at the end of 1 year and 9 months.…

A: Loan amount = P 12450 Par value = P 12840 Discount amount = Par value-Loan amount…

Q: If you borrow $2,900 and agree to repay the loan in six equal annual payments at an interest rate of…

A: a. Present value of payment = Payment *[1-(1+interest rate)^-time period]/rate $2,900=Payment *…

Q: Suppose that you take an add-on loan for $28,000 at an annual rate of interest of 3.5% to be repaid…

A: Loan amount (L) = $28000 r = 3.5% n = 30 years Let the yearly payment = A

Q: In a discount interest loan, you pay the interest payment up front. For example, if a 1-year loan is…

A: Given: Interest rate = 8.50% Amount borrowed = $42,000 Interest amount = $3,570 Net loan = $38,430

Q: If $6,840.00 is loaned for 4 months at an annual simple interest rate of 3.5%, how much interest is…

A: Principal =$6840 Time = 4 months Simple Interest = 3.50%

Q: "If you borrow $9,725 and are required to repay the loan in five equal annual installments of…

A: Using financial calculator

Q: You plan to borrow $47,800 at an 8.5% annual interest rate. The terms require you to amortize the…

A: Loan amount (PV) = $ 47800 Interest rate (r) = 8.5% Number of annual payments (n) = 7

Q: Use the add-on method for determining interest on a loan of $2410, with an annual rate of 9% and…

A: Given data, Principal amount (P) = $2410 Rate of interest (r) = 9% Time (t) = 4 years

Q: You borrowed $700 at 5% compounded quarterly. Yourpayments are $150 at the end of each year. How…

A: We will adopt the following approach:It's a typical time value of money case, where we have to find…

Q: Assume you make a single deposit of $1000 into a savings account that pays interest at 0.5% per…

A: Monthly compound interest relates to the compounding of interest on a monthly basis, which indicates…

Q: A payday lender lends money on the following terms: “If I give you $100 today, you will write me a…

A: An interest method in which current interest is computed by multiplying the interest rate by the sum…

Q: e following loan is a simple interest amortized loan with monthly payments. (Round your answers to…

A: Mortgage refers to a legal agreement as per which the lending institution such as banks, cooperative…

Q: you have just borrowed $51,107 at an annual interest of 7.6% and must repay the loan in equal…

A: Given:

Q: If you borrow $20,000 at an interest rate of 8%, compounded annually with the following repayment…

A: In the given sum we are given loan amount and interest rate. We must find the value of A which is…

Q: Your uncle lends you $2,000 less $100 (interest at 5 percent), and you receive $1,900. Use the APR…

A: Given: Future value (FV) = $2000 Present value (PV) = $19000

Q: If the interest rate is at 8%, what is the maximum amount that can be loaned given a repaid of :…

A: Maximum amount that can be loaned is the total sum of present value of all repayment.

Q: What would be the interest rate on a loan of $9476.97 that you paid off with annual payments of…

A: A loan simply refers to the amount borrowed from a lender. The lender in such a scenario might be a…

Q: Find the interest rates earned on each of the following:a. You borrow $720 and promise to pay back…

A: Given:

Q: lculate the present value of the compound interest loan. (Round your answers to the nearest cent.)…

A: In this we have to calculate the present value of loan using given interest rate and compounding.

Q: 1. Let's assume that a loan of $100,000 with an annual interest rate of 6% over 30 years pays…

A: Accumulation rate is the increase in size of asset, position or overall buying activity of…

Q: You plan to borrow $35,000 at a 7.5% annual interest rate. The terms require you to amortize the…

A: Borrow amounted = $35,000 rate of interest = 7.5% total payments =7

Q: effective rates of interest find the interest rate earned on each of the following :

A: Effective Rate of interest is as below Formula for Effective rate of interest is r=…

Concept explainers

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.

Question

You are loaned $300 at the end of years 1, 2,
and 3. You pay this loan back with payments
of X at the end of year 5, and $300 at the end
of years 4, 6, and 7. Find X if the effective
annual interest rate i = .07

Expert Solution

This question has been solved!

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

SEE SOLUTION Check out a sample Q&A here

Step 1

VIEW

Step 2

VIEW

Step by step

Solved in 2 steps with 2 images

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

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?
You put $600 in the bank for 3 years at 15%. A. If Interest Is added at the end of the year, how much will you have in the bank after one year? Calculate the amount you will have in the bank at the end of year two and continue to calculate all the way to the end of the third year. B. Use the future value of $1 table In Appendix B and verify that your answer is correct.
You put $250 in the bank for S years at 12%. A. If interest is added at the end of the year, how much will you have in the bank after one year? Calculate the amount you will have in the bank at the end of year two and continue to calculate all the way to the end of the fifth year. B. Use the future value of $1 table in Appendix B and verity that your answer is correct.
Calculating and comparing add-on and simple interest loans. Eli Nelson is borrowing 10,000 for five years at 7 percent. Payments, which are made on a monthly basis, are determined using the add-on method. a. How much total interest will Eli pay on the loan if it is held for the full five-year term? b. What are Elis monthly payments? c. How much higher are the monthly payments under the add-on method than under the simple interest method?
Use the tables in Appendix B to answer the following questions. A. If you would like to accumulate $2,500 over the next 4 years when the interest rate is 15%, how much do you need to deposit in the account? B. If you place $6,200 in a savings account, how much will you have at the end of 7 years with a 12% interest rate? C. You invest $8,000 per year for 10 years at 12% interest, how much will you have at the end of 10 years? D. You win the lottery and can either receive $750,000 as a lump sum or $50,000 per year for 20 years. Assuming you can earn 8% interest, which do you recommend and why?
Use the tables in Appendix B to answer the following questions. A. If you would like to accumulate $4,200 over the next 6 years when the interest rate is 8%, how much do you need to deposit in the account? B. If you place $8,700 in a savings account, how much will you have at the end of 12 years with an interest rate of 8%? C. You invest $2,000 per year, at the end of the year, for 20 years at 10% interest. How much will you have at the end of 20 years? D. You win the lottery and can either receive $500,000 as a lump sum or $60,000 per year for 20 years. Assuming you can earn 3% interest, which do you recommend and why?