Personal Finance (MindTap Course List)
13th Edition
ISBN: 9781337099752
Author: E. Thomas Garman, Raymond Forgue
Publisher: Cengage Learning
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Lulu’s Pies is looking for financing to improve their As Lulu’s Pies expecting high receivables, owner is considering Factoring. As a banker, explain to the owner what Factoring is and advice TWO (2) advantages and TWO (2) disadvantages of choosing this type of financing.
Which loan you would recommend llyods to take forward and why? Please read the email before you give answer to the question.
If you are borrowing money to purchase a car, the loan agreement will likely include:Select an answer from the options below.
A
a collision insurance policyB
payment schedule to pay the principal and interestC
a mortgage on your houseD
payment schedule to pay the interest
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- First-time homeowners often use FHA loans to finance their home. Go to fha-home-loans.com and find out the current requirements to qualify for an FHA loan. They may differ slightly from that described in the book because the underwriting requirements frequently change. Summarize the types of loans that are currently available. What is the highest loan-to-value ratio that you could obtain?arrow_forwardDiscuss the basics of loan amortization and develop a loan amortization schedulethat you might use when considering an auto loan or home mortgage loan.arrow_forwardIf you were a wise credit card user, under which of the following conditions would you consider using a credit card to finance an expensive purchase? a. If I haven't reached my credit limit and I really want to item b.If I believe my money situation will be better (for example, a better-paying job) in the future than it is now. c.If I have the money to pay for the item in my bank account and plan to immediately pay the balance in full. d. If my card has good rewards on it.arrow_forward
- This is a Debt Coverage Ratio or DCR question for part a and a CAP rate question for part b]. Wendy is going to purchase a commercial building and is working with a commercial lender at her local bank. The bank has some loan parameters that Wendy must follow. Understanding the rules will allow her to calculate her cash, income, and payment projections. The bank requires a 1.4 debt coverage ratio for her project. Wendy needs to calculate her net operating income or NOI first. The debt coverage ratio is based on this number. Then she will apply for a 20 year loan at 5% with annual payments. Information on the property includes: Gross rents- $780,000 Vacancy 5% Salaries $85,000 Other Fixed Expenses $125,000 Variable Expenses 20% of gross rents. NOI=_________________ Use the NOI and Debt Coverage requirement to calculate the answer. What is the largest annual payment the bank will allow? If Wendy had to buy the property at a 6% CAP (capitalization) rate, what is the asking price?arrow_forwardBefore taking out a consumer loan, you should be sure the purchase is compatible with your financial plans and budget. Discuss the loan features you would take into consideration when shopping for credit.arrow_forwardThe web page of each bank in Turkey has a financial calculator that will prepare a loan amortization table based on your inputs. If you follow the “Auto Loan Calculator” link, you can calculate the monthly payments of your loan and this link will prepare a payment plan for your loan. Suppose that you want to buy an automobile with a bank loan. Search for different “auto loans” of different banks in Turkey and choose the most appropriate one for you. Give the name of the bank. Determine how much you want to borrow and in how many years you can pay it back with monthly payments by yourself. 1) What is the Annual Percentage Rate (APR) (Nominal rate) on this loan? What is the Effective Annual Rate (EAR)?arrow_forward
- In this part of the project, you will be purchasing the home you chose in the Budget Project. You will need to obtain a loan from a financial institution since you cannot pay cash for your home. You will be researching three different loan scenarios and determining which loan option best fits your situation and needs. Purchase price of the home you chose from the Budget Project: ________$431,873______ Part 1: Financing your home Loan Scenario 1: In this scenario, your financial institution is offering you a 30-year fixed mortgage with a 20% down payment at a 3.43% fixed rate. Determine the following: Calculate the down payment for this loan. How much will you need to finance from the bank for this loan? What is your monthly payment? Use technology or the monthly payment formula in your text to get the monthly payment for this loan. What is the total cost of the loan over 30 years? How much of this cost is interest? What is the total you will expect to pay at closing for this loan…arrow_forwardThe information and answer is given in the images. I just need to know how they calculated imputed interest on housing loan 170. Just need to know the steps. Thanksarrow_forwardYou want to buy a used car but don't have enough money to purchase it outright. Your parents suggest that you check around at local banks, credit unions, and savings and loans to compare the interest rate on a 36-month $2,000 loan for an older used car. Please Answer the following questions: 1. What is the lowest interest rate that is being charged to borrow money for a used car at a bank, credit union, and savings and loan? Include the interest rate and the name of the institution offering the loan. 2. Of the three options(local banks, credit unions, and savings and loans), which location has the lowest interest rate for a loan?arrow_forward
- Provide an analysis of how the following investment patterns can be explained using theories of behavioral finance. A loan approver is considering a mortgage application. There are two possible scenarios: Scenario A: the loan approver has approved three mortgage applications in a row earlier today. Scenario B: the loan approver has approved two mortgage applications and rejected another one earlier today. Researchers find that the probability for the loan approver to reject the current mortgage applicationin scenario A is higher than that in scenario B.arrow_forwardEvaluating financing packages. Assume that you’ve been shopping for a new car and intend to finance part of it through an installment loan. The car you’re looking for has a sticker price of $18,000. Custom Vehicles has offered to sell it to you for $3,000 down and finance the balance with a loan that will require 48 monthly payments of $333.67. However, a competing dealership will sell you the exact same vehicle for $3,500 down, plus a 60-month loan for the balance, with monthly payments of $265.02. Which of these two financing packages is the better deal?arrow_forwardAfter examining the various personal loan rates available to you, you find that you can borrow funds from a finance company at 8 percent compounded or from a bank at 9 percent compounded . Which alternative is more attractive?arrow_forward
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