Real Estate Finance And Investments
Real Estate Finance And Investments
6th Edition
ISBN: 9781259919688
Author: BRUEGGEMAN, William B., Fisher, Jeffrey D.
Publisher: Mcgraw-hill Education,
Question
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Chapter 4, Problem 3P

a.

Summary Introduction

To determine: Payment for each period if interest is accrued monthly.

a.

Expert Solution
Check Mark

Explanation of Solution

The formula to calculate payment for each period is as follows:

Payment=Principle amount{[(1+r)360]1}[r(1+r)360]

Payment=$100,000{[(1+0.005)360]1}[0.005(1+0.005)360]=$100,000$166.7916=$599.55

Hence, the payment will be of $599.55 if the interest is accrued monthly.

b.

Summary Introduction

To determine: Payment for each period if interest is accrued Quarterly.

b.

Expert Solution
Check Mark

Explanation of Solution

The formula to calculate payment for each period is as follows:

Payment=Principle amount{[(1+r)120]1}[r(1+r)120]

Payment=$100,000{[(1+0.015)120]1}[0.015(1+0.015)120]=$100,000$55.4985=$1,801.85

Hence, the payment will be of $1,801.85 if the interest is accrued quarterly.

c.

Summary Introduction

To determine: Payment for each period if interest is accrued annually.

c.

Expert Solution
Check Mark

Explanation of Solution

The formula to calculate payment for each period is as follows:

Payment=Principle amount{[(1+r)30]1}[r(1+r)30]

Payment=$100,000{[(1+0.06)30]1}[0.06(1+0.06)30]=$100,000$13.76483=$7,264.89

Hence, the payment will be of $7,264.89 if the interest is accrued annually.

d.

Summary Introduction

To determine: Payment for each period if interest is accrued annually.

d.

Expert Solution
Check Mark

Explanation of Solution

The formula to calculate payment for each period is as follows:

Payment=Principle amount{[(1+r)1,560]1}[r(1+r)1,560]

Payment=$100,000{[(1+0.0012)1,560]1}[0.0012(1+0.0012)1,560]=$100,000$723.2749=$138.26

Hence, the payment will be of $138.26 if the interest is accrued weekly.

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