You buy a home for $177,831 and put $11,459 down. You borrow the remainder. The mortgage company also charges a 3% loan and closing fee which you must also borrow. The interest rate is 6.5% for 30 years. Fill in the following to find the total cost of credit. Assume you make the monthly payments for the full number of years. Round to the nearest cent (2 decimal places). Do NOT put $ in your answer. After the down payment, you will need to borrow $ Including the loan and closing fee, the total amount financed will be $ Your monthly payment will be $

You buy a home for $177,831 and put $11,459 down. You borrow the remainder. The mortgage company also charges a 3% loan and closing fee which you must also borrow. The interest rate is 6.5% for 30 years. Fill in the following to find the total cost of credit. Assume you make the monthly payments for the full number of years. Round to the nearest cent (2 decimal places). Do NOT put $ in your answer. After the down payment, you will need to borrow $ Including the loan and closing fee, the total amount financed will be $ Your monthly payment will be $

EBK CONTEMPORARY FINANCIAL MANAGEMENT

14th Edition

ISBN:9781337514835

Author:MOYER

Publisher:MOYER

Chapter19: Lease And Intermediate-term Financing

Section: Chapter Questions

Problem 19P

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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
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