Your brother has just taken out a loan for $75,000. The stated (simple) interest rate on this loan is 10 percent, and the bank requires him to maintain a compensating balance equal to 15 percent of the initial face amount of the loan. He currently has $20,000 in his checking account, and he plans to maintain this balance. The loan is an add-on installment loan which he wil repay in 12 equal monthly instaliments, beginning at the end of the first month. What is the approximate average usable funds on this loan? Select one: a. $6,875 b. $20,000 C. $15,000 d. $75,000 e. $37,500

Q: On the day you entered college, you borrowed $30,000 from your local bank. The terms of the loan…

A: The computation of total interest is done as shown:

Q: Roland just put RM1,000 in the fixed deposit and intend to leave it there for 10 years. If the bank…

A: Formula Future value = PV*(1+(i/c))n*c Where PV = Present value i.e. RM1,000 i = Interest rate i.e.…

Q: Steven just deposited $10,000 in a bank account that has a 12 percent nominal interest rate, and in…

A: Given information : Year end Cash flow 0 $10,000 1 $10,000 2 $20,000 Discount rate…

Q: 10,000 bank loan in 10 equal payments at a 10% effective annual interest rate. Immediately after her…

A: the amount of each of the 12 payments. given: P10,000 bank loan in 10 equal payments 10% effective…

Q: Starting on the day he retires, Bob wants to receive payments of $10,000 at the beginning of each…

A: Present value of the amount is the worth of that amount in current times that is expected to be…

Q: Jacob needed money for some unexpected expenses, so he borrowed $3,813.23 from a friend and agreed…

A: Borrowings are the liability of the company which is used to finance the requirement of the funds.…

Q: You would like to have $8,000.00 in 15 years for a special vacation following graduation by making…

A: Using the PMT function in excel

Q: Nine  years  from  now,  Sam  wants  to  have  an  amount  available  to  deposit  into  an  account…

A: ANSWER GIVEN ON THE NEXT SHEET

Q: Juan borrows $25,000 at 7% compounded annually. If the loan is repaid in five equal annual payments,…

A: What are installments? Installment is the sum of money to be paid in a particular time frame to pay…

Q: Peter has RM10,000 that he can deposit in any three savings accounts for a 3-year period. Bank A…

A: answer deposit amount =RM10,000 Rate of interest = 4% period = 3 year bank A = compounding annual…

Q: Peter has $10,000 that he can deposit in any three savings accounts for a 3- year period. Bank A…

A: Deposit = 10,000 Time Period of Deposits = 3 years   Bank A Annual Compounding Interest Rate = 4% N…

Q: ones can deposit $5,000 at the end of each 6-month period for the next 12 years and earn interest at…

A: a) Future value of annuity = P * [ (1+r)^n  - 1 ] /r  Where, P =Periodic payment i.e. $5000 n = no.…

Q: Dean Gooch is planning for his retirement, so he is setting up a payout annuity with his bank. He…

A: Payout annuity is the amount that an investor receives at a regular interval after a certain period…

Q: John House has taken a $150,000 mortgage on his house at an interest rate of 6% per year. If the…

A: The annuity refers to the series of cash payments and receipts that finished over a period. The…

Q: If you borrow $2,800 and agree to repay the loan in five equal annual payments at an interest rate…

A: In this problem we have to find present value FACTOR and from that we can find out annual payment.

Q: Roland just put RM1,000 in the fixed deposit and intend to leave it there for 10 years. If the bank…

A: Investment amount = RM 1,000 Annual interest rate = 16% Semi annual interest rate = 16%/2 = 8%…

Q: You must make a payment of $1,668.06 in 10 years. To get the money for this payment, you will make…

A: There will be 5 deposits on: 1. Beginning of Q1 2. Beginning of Q2 3. Beginning of Q3 4. Beginning…

Q: Emilio desires $9,000 as the proceeds of a 90-day loan from Winston who charges 5% interest in…

A: Time has been valuable in all aspects but in terms of finance, time has a money value. The worth of…

Q: Your grandmother set up an annuity, in which she will receive a monthly payment from the bank of…

A: The present value of an annuity is the present value of a series of cash flows at a certain rate of…

Q: Reggie availed of a deferred payment scheme from a bank that gave her an option to pay ₱5,500…

A: solution given Monthly payment 5500 Rate of interest 12% annual Compounding…

Q: Marcus is expected to settle a loan by paying $6,000. What amount should he pay if he decides to…

A: Present Value refers to the discounted value of a single cash flow or multiple cash flows today…

Q: Johnny has a loan for $50,000 at a rate of i(4) = 8% on which he makes quarterly payments of $2,000.…

A: Amount of deposit every 3 months: $500 starting from today at a rate of interest of 1% effectively.…

Q: Tika has $10 000 that he can deposit into a savings account for 5 years. ANZ pays compounds interest…

A: Time value of money- It is based on the concept that money earned today is worth more than similar…

Q: Your brother has asked you for a loan and has promised to pay back $7,750 at the end of three years.…

A: Present value is the worth of amount in current time that is expected to be receive in some future…

Q: In the following ordinary annuity, the interest is compounded with each payment, and the payment is…

A: It can be solved using NPER function in excel. =NPER(rate,pmt,pv,[fv],[type]) Rate The interest…

Q: To pay for your child’s education, you wish to have accumulated $25,000 at the end of 15 years. To…

A: Future Value refers to compounded value of present amount or a series of equal amount of payment…

Q: f you borrows $60,000 from the bank at 10% interest over the 7 years of the loan. • What equal…

A: A study that proves that the future worth of the money is lower than its current value due to…

Q: How much less can they expect to pay over the life of the loan in interest payments by refinancing…

A: Information Provided: Original Loan = $110,000 N = 267 First Interest rate = 11%/year compounded…

Q: Dean Gooch is planning for his retirement, so he is setting up a payout annuity with his bank. He…

A: The annuity is a series of cash flow wherein an equal amount is paid every period.

Q: Avishek has an interest only loan for $100,000.00 maturing in 9 years. The interest rate on the loan…

A: Calculate the quarterly rate as follows: Quarterly rate =(1+Biweekly rate)264-1 Quarterly rate…

Q: You plan to make a series of deposits in an individual retirement account. You will deposit $1,000…

A: According to the time value of money concept, money available today has interest earnings ability.…

Q: When you were born, your parents started to deposit monthly $2,000 in the bank. The bank offers a…

A: Since you have asked multiple question, we will solve the first question for you. If you want any…

Q: Karen wants to have $22,559 in her investment account in 5 years. If her bank offers an annual…

A: Following details are given in the question : Future value = $22559 Time period = 5 years Interest…

Q: You want to have GH¢ 50,000 in your savings account five years from now, and you’re prepared to make…

A: In the given problem we need to find the Annual Deposit amount for 5 years which cumulates @9.5% to…

Q: You are working for a finance firm and a client comes to you and wants to know how much money they…

A: A theory that helps to compute the present or future value of the cash flows is term as the TVM…

Q: Bob wants to deposit $5000 into a bank account at the beginning of the next month and $200 per month…

A: This account can be divided into two account: principal amount $5000 at rate 3% pa compounded…

Q: An individual needs $12,000 immediately as a down payment on a new home. Suppose that he can borrow…

A: The present value is the value of the sum received at time 0 or the current period. It is the value…

Q: İhsan wants to pay the 50,000 TL loan he received from the bank in annual installments of 2,500 TL…

A: The loan refers to the fund provided by the lender to the borrower at a certain interest rate for a…

Q: You would like to have ​$53,000 in 13 years. To accumulate this​ amount, you plan to deposit an…

A: Present value refers to the current valuation for a future sum. Investors determine the present…

Q: Gilbert got a loan of P100,000 from a local lending agency at 13% compounded annually. Their…

A: We can solve this in excel using the "goal seek" function. First of all make a loan amortization…

Q: Mr smith wants to borrow P100,000 from a bank to rebuild his shop from damages caused by an…

A: First we need to calculate size of quarterly payment of loan amount. PMT =PV*i1-1(1+i)n where PV…

Q: Tandang Sora has deposited P33,000 today in an account which will earn 10 percent annually. She…

A: Given information: Present value : P33,000 Rate of interest : 10% Time period : 7 years Future…

Q: Moon purchases a lot for $300,000. Moon agrees to pay $25,000 dollars at the end of each year. If…

A: Time has been precious in all perspectives, however in terms of finance, time has a monetary value.…

Q: Tim needs to borrow money today. He agrees to pay back the loan via 30 equal monthly installments of…

A: Present Value of annuity refers to the value of cash flows today of a series of equal cash flows or…

Q: How much Alex must deposit annually if he wants to have $800,000 in 25 years by making equal annual…

A: Annual payments refers to the periodic payment which can be used for a variety of purposes like for…

Q: Mike has a credit card balance of $30,000. The annual interest rate is 17%. He is required to pay a…

A: Credit Balance  $  30,000.00 Annual Interest Rate  17% Minimum Payment 4% or  $        50.00…

Present Value

Present value (PV) is defined as the current or present value of all future sums of cash flow or money at a specified rate of return. This rate of return is known as the discounted rate, which is essentially the interest rate, discounted over some time. The expected cash flows are discounted at a discount rate to compute the present value. The higher the discount rate, the higher the future value (FV), but the lower the present value.