Andres Michael bought a new boat. He took out a loan for $24,420 at 3.5% interest for 2 years. He made a $4,330 partial payment at 2 months and another partial payment of $2,600 at 6 months. How much is due at maturity?

Andres Michael bought a new boat. He took out a loan for $24,420 at 3.5% interest for 2 years. He made a $4,330 partial payment at 2 months and another partial payment of $2,600 at 6 months. How much is due at maturity?

EBK CFIN

6th Edition

ISBN:9781337671743

Author:BESLEY

Publisher:BESLEY

Chapter4: Time Value Of Money

Section: Chapter Questions

Problem 19PROB

See similar textbooks

Related questions

Q: You need to have $30,750 in 11 years. You can earn an annual interest rate of 6 percent for the…

A: To calculate the deposit amount we will use the below formula Deposit amount =…

Q: Write the constraint below as a linear inequality. A canoe requires 6 hours of fabrication and a…

A: Here, X is the number of canoes Y is he number of rowboat. Total number of hours should not exceed…

Q: Lottery. Your dreams of becoming rich have just come true. You have won the State of Tranquility's…

A: Present value is the estimation of the current value of future cash value which is likely to be…

Q: Give typing answer with explanation and conclusion Which one of the following is a source of cash?…

A: Source of cash means inflow of cash

Q: Stock Y has a beta of 1 and an expected return of 13.5 percent. Stock Z has a beta of .6 and an…

A: When trading specific stocks, the risk/reward ratio is used as a gauge. Different trading methods…

Q: Question 5: An annuity contract will make 8 annual payments and the first payment occurs exactly a…

A: The question is based on the concept of Financial Management. Annuity refers to the series of equal…

Q: An investor makes a 15 year deposit of $57,632. The bank is paying an interest rate of 11% per year,…

A: The value of deposit is $57,632. The maturity period is 15 years. The annual interest rate is 11%.…

Q: 1. The better alternative between the first increment is ________________. 2. The better…

Q: he buyer of a piece of real estate is often given the option of buying down the loan. This option…

A: The discount point refers to the optional fee (additional fee) that the borrower pays to the lender…

Q: You ran a little short on your spring break vacation, so you put $1,000 on your other credit card.…

A: Information Provided: Present value = $1000 Quarterly payment = $60 Interest rate = 18% compounded…

Q: Performance Evaluation and Active Portfolio Management Difficulties in adjusting average returns for…

A: Portfolio performances can be measured with some techniques such as Sharpe ratio, Treynor ratio and…

Q: Company H is planning to purchase a machine for $100,000 and will incur an additional $10,000 in…

A: The initial investment is the cost of acquiring fixed assets which includes the installation…

Q: the company's preferred stock pays an annual dividend of 4.5 percent and is currently selling for…

A: The price a firm must pay for the revenue it will receive from issuing and selling preferred stock…

Q: On October 25, you plan to purchase a $1,500 computer by using one of your two credit cards. The…

A: The previous balance method charges interest for each month based on the outstanding balance at the…

Q: Assume Highline Company has just paid an annual dividend of $1.07. Analysts are predicting an 10.5%…

A: As per the dividend discount model the value of a stock today is the present value of all its future…

Q: Analysts at Sky West Airlines did a 3 year projection of expenses. They calculated that the company…

A: PV of Annuity Due: It represents the current worth of the series of annuity payments that are due…

Q: 6. Sharon lives in Saskatoon. She wants to go to the West Edmonton Mall for a shopping trip with her…

A: Financial planning is the process of creating a roadmap to help you achieve your financial goals. It…

Q: Review Warren Buffett’s 2022 letter to shareholders and write a few sentences on anything that…

A: The letter provide the insight which past as a guided in future as a decided in order to take…

Q: Angelo Lemay borrowed $8000 from his credit union. He agreed to repay the loan by making equal…

A: The total cost of the loan = Monthly Payments (Using PMT function (a)) * {Loan Period in months *…

Q: Kilroy Enterprises' bonds currently sell for $1,050. They have a 6-year maturity, an annual coupon…

A: In the given case, we have provided the current selling price of bond along with par value of bond.…

Q: Jefferson qualifies for an income- adjusted monthly payment of $455. If Jefferson has a subsidized…

A: Number of months required to payoff the loan is calculated using NPER function in excel

Q: Discuss the findings of Malkiel (1992) essay ‘Efficient market hypothesis’ in the New Palgrave…

A: Burton Malkiel's essay on the Efficient Market Hypothesis (EMH) in the New Palgrave Dictionary of…

Q: Une year ago, an investor purchased a 10-year 8% annual coupon bond at par of $1,000. Today (with 9…

A: As per the given information: Par value of bond = $1,000Maturity period = 9 yearsYield rate = 7.10%…

Q: Mercury draws a cash flow diagram to model the following scenario. A 180-day commercial bill will…

A: Note: 365 days convention is used in the calculation for accurate answers Here, Initial cash outflow…

Q: An agreement stipulates payments of $5000,$3500 and $6000 in three, six and nine months,…

A: Present value is a financial concept that represents the value of a future sum of money in terms of…

Q: Prices and yields to maturity on four zero-coupon bonds: Maturity Yield to Maturity Price 1 Year 5%…

A: The short rate refers to the interest rate that security provides if it had been held for a fixed…

Q: The future value of a single sum A. is generally larger than the present sum. B. decreases…

A: The future value (FV) is the value of an investment or sum of money at a specified future date,…

Q: You are the loan department supervisor for a bank. This installment loan is being paid off early,…

A: Rebate fraction is a fraction that is a widely accepted method for calculating the finance charge…

Q: Ellen now has $420. How much would she have after 7 years if she leaves it invested at 5.4% with…

A: Future Value = P * (1 + r)^nWhere P = Present ValueR = Rate of InterestN = Number of periods

Q: Calculate the missing information for the installment loan that is being paid off early. Number of…

A: An installment loan refers to a contract between the lender and the borrower for raising funds in…

Q: s the information on the balance sheet, activity statement, and cash flow statement independent of…

A: The three main financial statements that a company prepares are – income statement, balance sheet…

Q: Solve by using the sinking fund or amortization formula. A manufacturing company has determined that…

A: To calculate the semi-annual deposit amount we will use the below formula Semi-annual deposit =…

Q: In the yellow cell immediately below write a formula that sets the cell to '1' if H186 equals 2 and…

A: An Excel function is a built-in formula that performs a specific task in Excel. Functions can be…

Q: Give typing answer with explanation and conclusion As a firm progresses through the maturity stage…

A: When ever the firm is in progressive stage they needs funds to grow the business and for this they…

Q: Refer the table below on the average excess return of the U.S. equity market and the standard…

A: An investor would choose a portfolio with the minimum risk relative to the chosen level of returns.…

Q: Future value. Jack and Jill are saving for a rainy day and decide to put $40 away in their local…

A: Data given: PMT=$40 N=30 year Rate=10% Required: Future value at the end of 30 year.

Q: Emma wants to donate $1,000,000 to establish a fund to provide an annual scholarship in perpetuity.…

A: Annual rate "r" is 5% number of compounding "m"= 4 Present value of the donation amount = $1000000…

Q: Aspen Company's non-callable bonds currently sell for $985. They have a 15-year maturity, an annual…

A: Yield to maturity refers to the internal rate of return which is earned by the investor who makes…

Q: A risk-averse investor is considering two possible assets as the assets to be held in isolation. The…

Q: Discuss how The Migration Analysis Method can mitigate future credit risk issues for Washington…

A: Credit risk management The process of locating, evaluating, and reducing risks connected to lending…

Q: Kinston Enterprises has a debt obligation of $47 million that is due now. The market value of…

A: Debt = d = $47 million Assets = a = $102 million Old number of shares outstanding = on = 5 million

Q: A company borrowed $13,000 paying interest at 5% compounded semi-annually. If the loan is repaid by…

A: Amortization: It represents the process of paying off the loan amount in equal installments…

Q: 6. Explain how moral hazard could lead people to under-save if social security were replaced by…

A: The model hazard is considered to be the risk that individual make decision best upon the…

Q: What is the accumulated value of periodic deposits of $6,000 made into an investment fund at the…

A: Given the following: Periodic payment, P = $6,000 Interest rate = 4.50% Period = 5 years The…

Q: You have been offered a contract to work as a consultant. The company will pay you $6215 per month.…

A: The worth of the contract today is the present value of all the given amounts. The amounts are…

Q: Angelica received a 12 year non-subsidized student loan of $12,000 at an annual interest rate of…

A: Loan: It illustrates the amount given by the lender to the borrower. The borrower makes interest…

Q: Money is a claim against both real and financial assets. True/false.

A: Financial assets are intangible assets that represent a claim to an economic resource. They are…

Q: Vigour Pharmaceuticals Ltd. is considering investing in a new production line for its pain-reliever…

A: Initial cost includes the cost of equipment, installation cost and increase in net working capital.…

Q: Ken spent 1/4 of his money and an additional $6 on a number of CDs. He then spent 3/5 of the…

A: Let the amount now be “X’, Amount spent on CD is x/4+$6. Amount spent on magazine is “(X-X/4)*3/5 +…

Q: For four years, Mary Thomas invested $4,400 each year in America Bank stock. The stock was selling…

A: The total amount invested in a share is calculated as number of shares multiplied by price per share…

Concept explainers

Cost of Credit

The cost of credit is an extra amount that the borrower has to pay besides the loan amount. These credit charges may vary from loan to loan. The cost of credit includes interest charges, maintenance charges, and arrangement charges. Some of the costs are mandatorily collected by the lender based on the loan amount and tenure of the loan. The cost of credit is also called finance charges of the credit.

Question

Expert Solution

This question has been solved!

Explore an expertly crafted, step-by-step solution for a thorough understanding of key concepts.

This is a popular solution!

SEE SOLUTION Check out a sample Q&A here

Step 1: Introduction

VIEW

Step 2: Caculations

VIEW

Trending now

This is a popular solution!

Step by step

Solved in 2 steps with 2 images

SEE SOLUTION Check out a sample Q&A here

Knowledge Booster

Learn more about

Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, finance and related others by exploring similar questions and additional content below.

Similar questions

Samuel Ames owes 20,000 to a friend. He wants to know how much he would have to pay if he paid the debt in 3 annual installments at the end of each year, which would include interest at 14%. Draw a time line for the problem. Indicate what table to use. Look up the table value and place it in a brief formula. Solve.
McMasters Inc. specializes in BBQ accessories. In order for the company to expand its business, they take out a long-term loan in the amount of $800,000. Assume that any loans are created on January 1. The terms of the loan include a periodic payment plan, where interest payments are accumulated each year but are only computed against the outstanding principal balance during that current period. The annual interest rate is 9%. Each year on December 31, the company pays down the principal balance by $50,000. This payment is considered part of the outstanding principal balance when computing the interest accumulation that also occurs on December 31 of that year. A. Determine the outstanding principal balance on December 31 of the first year that is computed for interest. B. Compute the interest accrued on December 31 of the first year. C. Make a journal entry to record interest accumulated during the first year, but not paid as of December 31 of that first year.
Scrimiger Paints wants to upgrade its machinery and on September 20 takes out a loan from the bank in the amount of $500,000. The terms of the loan are 2.9% annual interest rate and payable in 8 months. Interest is due in equal payments each month. Compute the interest expense due each month. Show the journal entry to recognize the interest payment on October 20, and the entry for payment of the short-term note and final interest payment on May 20. Round to the nearest cent if required.
Mohammed LLC is a growing consulting firm. The following transactions take place during the current year. A. On June 10, Mohammed borrows $270,000 from a bank to cover the initial cost of expansion. Terms of the loan are payment due in four months from June 10, and annual interest rate of 5%. B. On July 9, Mohammed borrows an additional $100,000 with payment due in four months from July 9, and an annual interest rate of 12%. C. Mohammed pays their accounts in full on October 10 for the June 10 loan, and on November 9 for the July 9 loan. Record the journal entries to recognize the initial borrowings, and the two payments for Mohammed.
You put $600 in the bank for 3 years at 15%. A. If Interest Is added at the end of the year, how much will you have in the bank after one year? Calculate the amount you will have in the bank at the end of year two and continue to calculate all the way to the end of the third year. B. Use the future value of $1 table In Appendix B and verify that your answer is correct.
Refer to the present value table information on the previous page. What amount should Brett have in his bank account today, before withdrawal, if he needs 2,000 each year for 4 years, with the first withdrawal to be made today and each subsequent withdrawal at 1-year intervals? (Brett is to have exactly a zero balance in his bank account after the fourth withdrawal.) a. 2,000 + (2,000 0.926) + (2,000 0. 857) + (2,000 0.794) b. 2,0000.7354 c. (2,000 0.926) + (2,000 0.857) + (2,000 0.794) + (2,000 0.735) d. 2,0000.9264
Homeland Plus specializes in home goods and accessories. In order for the company to expand its business, the company takes out a long-term loan in the amount of $650,000. Assume that any loans are created on January 1. The terms of the loan include a periodic payment plan, where interest payments are accumulated each year but are only computed against the outstanding principal balance during that current period. The annual interest rate is 8.5%. Each year on December 31, the company pays down the principal balance by $80,000. This payment is considered part of the outstanding principal balance when computing the interest accumulation that also occurs on December 31 of that year. A. Determine the outstanding principal balance on December 31 of the first year that is computed for interest. B. Compute the interest accrued on December 31 of the first year. C. Make a journal entry to record interest accumulated during the first year, but not paid as of December 31 of that first year.
A young engineer borrowed P 10,000 at 12% interest and paid P 2,000 per annum for the last 4 years. How much does he have to pay at the end of the fifth year in order to pay off his loan?
Andrew just bought a new boat for $15,000 to use on the river near his home. He has taken delivery of the boat and agreed to the terms of the following loan: all principal and interest is due in 3 years (balloon loan), first-year annual interest (on the purchase price) is set at 5%, this is to be adjusted up 1.5% per year for each of the following years of the loan. (a) How much does Andrew owe to pay off the loan in 3 years? (b) If inflation is 4%, what is the payment in Year-0 dollars? Given the following data, calculate the present worth of the investment.
Blake bought a new car and financed $⁢15,000 to make the purchase. He financed the car for 48 months with an APR of 4.5%. Assuming he made monthly payments, determine the total interest Blake paid over the life of the loan. Round your answer to the nearest cent, if necessary.
Carlos purchased a house for $230,000; he paid $11500 as a down payment and financed the balance amount at 3.9% compounded monthly for 25 years. the monthly payment is 1141.293. a) What was the amount of interest charged for the entire loan? b) If Carlos pays an additional $100 per month, how many periods will it take to pay off the load? c) If Carlos pays an additional $100 per month, how much interest will be saved?
In order to start a small business, Samy borrowed RM40, 000 from a bank. The loan is repaid by monthly installment for five years. The interest charged is 5% on the original balance. (a) Determine the monthly payment. (b) Immediately after paying for three years and six months, he decided to pay off the loan. Using the Rule of 78, calculate the amount he has to pay.