Alan borrows $100,000 at nominal interest rate 9% per annum which matures in 5 years. Repayments are made monthly such that each monthly payment in the last 2 years is twice that in the first 3 years. a) Calculate the monthly payments for this loan. b) Construct the amortization table for this loan which includes the following columns Installment, Interest payment, Principal payment, Outstanding balance. c) After 3 years, the market nominal interest rate falls to 6% per annum. Alan wants to terminate the loan. The bank charges the termination fee which is 40% of the difference in total remaining interest payment. Calculate the amount Alan needs to pay the bank (including outstanding balance and termination fool

Alan borrows $100,000 at nominal interest rate 9% per annum which matures in 5 years. Repayments are made monthly such that each monthly payment in the last 2 years is twice that in the first 3 years. a) Calculate the monthly payments for this loan. b) Construct the amortization table for this loan which includes the following columns Installment, Interest payment, Principal payment, Outstanding balance. c) After 3 years, the market nominal interest rate falls to 6% per annum. Alan wants to terminate the loan. The bank charges the termination fee which is 40% of the difference in total remaining interest payment. Calculate the amount Alan needs to pay the bank (including outstanding balance and termination fool

EBK CONTEMPORARY FINANCIAL MANAGEMENT

14th Edition

ISBN:9781337514835

Author:MOYER

Publisher:MOYER

Chapter19: Lease And Intermediate-term Financing

Section: Chapter Questions

Problem 17P

See similar textbooks

Similar questions

Calculating and comparing add-on and simple interest loans. Eli Nelson is borrowing 10,000 for five years at 7 percent. Payments, which are made on a monthly basis, are determined using the add-on method. a. How much total interest will Eli pay on the loan if it is held for the full five-year term? b. What are Elis monthly payments? c. How much higher are the monthly payments under the add-on method than under the simple interest method?
Alan borrows $100,000 at nominal interest rate 9% per annum which matures in 5years. Repayments are made monthly such that each monthly payment in the last 2years is twice that in the first 3 years.a) Calculate the monthly payments for this loan.b) Construct the amortization table for this loan which includes the following columnsInstallment, Interest payment, Principal payment, Outstanding balance.c) After 3 years, the market nominal interest rate falls to 6% per annum. Alan wantsto terminate the loan. The bank charges the termination fee which is 40% of thedifference in total remaining interest payment. Calculate the amount Alan needsto pay the bank (including outstanding balance and termination fee).d) Alan borrows the amount in part c) at 6% per annum. If he keeps to the currentmonthly payment, how long will he pay off everything ?e) What is Alan’s monthly payment if he decides to keep to his schedule of payingoff the debt in the next 2 years ?f) Suppose Alan follows the payment…
Complete the following from the first three lines of an amortization schedule for the following loan:You borrow $ 165000 with an annual interest rate of 7.5% over 15 years Starting principal = $ 165000New balance after month 1 payment = New balance after month 2 payment = New balance after month 3 payment =
Complete the first three lines of an amortization schedule for the following loan:You borrow $ 5000 with an annual interest rate of 9% over 7 years Starting principal = $ 5000Principal after month 1 payment = Principal after month 2 payment = Principal after month 3 payment =
Prepare an amortization schedule for a three-year loan of $96,000. The interest rate is 9 percent per year, and the loan calls for equal annual payments. How much total interest is paid over the life of the loan? Year 1: Beginning Balance, Total Payment, Interest Payment, Principal Payment, Ending balance Year 2: Beginning Balance, Total Payment, Interest Payment, Principal Payment, Ending balance Year 3: Beginning Balance, Total Payment, Interest Payment, Principal Payment, Ending balance Total Interest for all 3 Years.
Prepare the first row of a loan amortization schedule based on the following information. The loan amount is for $24,323.00 with an annual interest rate of 15.77%. The loan will be repaid over 7.0 years with monthly payments. Find Loan payment: Interest portion: Principle portion: Loan balance after first monthly payment:
Prepare an amortization schedule for a three-year loan of $108,000. The interest rate is 9 percent per year and the loan calls for equal annual payments. How much total interest is paid over the life of the loan? Beginnig Total Interest Principal Ending balance payment payment payment balance Total interest_____________________
Prepare the first row of a loan amortization schedule based on the following information. The loan amount is for $17,900 with an annual interest rate of 09.00%. The loan will be repaid over 22 years with monthly payments. 1. What is the Loan Payment? 2. What portion of this payment is Interest? 3. What portion of this payment is Principal? 4. What is the Loan balance after first monthly payment?
A fully amortizing mortgage loan is made for $84,000 at 6 percent interest for 25 years. Payments are to be made monthly. Required: a. Calculate monthly payments. b. Calculate interest and principal payments during month 1. c. Calculate total principal and total interest paid over 25 years. d. Calculate the outstanding loan balance if the loan is repaid at the end of year 10. e. Calculate total monthly interest and principal payments through year 10. f. What would the breakdown of interest and principal be during month 50?
Complete the first three lines of an amortization schedule for the following loan: You borrow $ 14000 with an annual interest rate of 12% over 9 years Starting principal = $ 14000 Principal after month 1 payment = Principal after month 2 payment = Principal after month 3 payment =
Consider the following loan. Complete parts (a)-(c) below. An individual borrowed $77,000 at an APR of 7% which will be paid off with monthly payments of $562 for 23 years. Identify the amount borrowed, the annual interest rate, the number of payments per year, the loan term, and the payment amount. The amount borrowed is $77,000 The annual interest rate is 7% The number of payments per year is 12 The number of payments per the loan term is 23 year And the payment amount is $562 How many total payments does the loan require? What is the total amount paid over the full term of the loan? There are ___ payments toward the loan and the total amount paid is _____
Complete the following from the first three lines of an amortization schedule for the following loan:You borrow $ 225000 with an annual interest rate of 9% over 20 years New balance after month 1 payment = New balance after month 2 payment = New balance after month 3 payment =