You borrowed $650,000 from a bank at an interest rate of 63% compounded quarterly to purchase a new house. You will pay off the loan in monthly installments over two years. If you want to pay the remainder of the loan in a single payment immediately after 12th payment, how much do you have to pay?

You borrowed $650,000 from a bank at an interest rate of 63% compounded quarterly to purchase a new house. You will pay off the loan in monthly installments over two years. If you want to pay the remainder of the loan in a single payment immediately after 12th payment, how much do you have to pay?

Principles of Accounting Volume 2

19th Edition

ISBN:9781947172609

Author:OpenStax

Publisher:OpenStax

Chapter11: Capital Budgeting Decisions

Section: Chapter Questions

Problem 6MC: You want to invest $8,000 at an annual Interest rate of 8% that compounds annually for 12 years....

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Concept explainers

Real Estate

Real estate means ownership of land along with the assets and natural resources that exist on the land. These properties are in real/physical form which is tangible. Real estate simply means land or addition made to land permanently like constructing a residence or different buildings. People invest in real estate to either reside or for wealth creation. Many people investing in real estate further lend the place for occupation or businesses in return for a monthly payment.

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You borrowed $650,000 from a bank at an interest rate of 63% compounded
quarterly to purchase a new house. You will pay off the loan in monthly installments
over two years. If you want to pay the remainder of the loan in a single payment
immediately after 12th payment, how much do you have to pay?

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Present Value of Annuity:

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Calculate monthly compounded interest rate:

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Calculate Monthly payments:

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Calculate Lum Sum payment after 12 payments:

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Conclusion:

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