A hedge fund is considering making a 5-year $600,000, 9.5% APR, interest-only loan. They will get...
A hedge fund is considering making a 5-year $600,000, 9.5% APR, interest-only loan. They will get monthly interest payments and the entire principal at the end of 5 years. Before making the loan, it will cost the fund $20,000 for due diligence, and after making the loan, it will cost the fund $500 per month for monitoring. Based on only the information above (to be even more clear, ignoring taxes), and assuming the borrower makes all the required payments on time, what APY interest rate does the fund expect to earn?
Homework Answers
Using Excel enter the below formula in any cell
=RATE(5*12,600000*9.5%/12-500,-600000-20000,600000)*12
=7.6948%
Add Answer to:
A hedge fund is considering making a 5-year $600,000, 9.5% APR,
interest-only loan. They will get...
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3. A $20,000 car is purchased under the 5-year loan at 2.4% (APR). What are the monthly payments? What is the total sum of payments? What wll be the net cost of the loan to the borrower versus cash? Hint: This is similar to annual calculation, but for month you need to consider the number of months and find the monthly interest to use in the formula
answer :4.78740% please no excel or actuarial calculator 4) A twenty-year loan of $25,000 is negotiated with the borrower agreeing to repay principal and interest at 5%. A level payment of $ 1 ,500 w...
answer :4.78740%
please no excel or actuarial calculator
4) A twenty-year loan of $25,000 is negotiated with the borrower agreeing to repay principal and interest at 5%. A level payment of $ 1 ,500 will apply during the first ten years, and a higher level payment will apply over the remaining ten years. Each time the lender receives a payment from the borrower, he will deposit the portion representing principal into a sinking fund with an annual effective interest rate...
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S&S Air’s Mortgage ark Sexton and Todd Story, the owners of S&S Air, Inc., greatest Interest...
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answer :4.78740%
please no excel or actuarial calculator
4) A twenty-year loan of $25,000 is negotiated with the borrower agreeing to repay principal and interest at 5%. A level payment of $ 1 ,500 will apply during the first ten years, and a higher level payment will apply over the remaining ten years. Each time the lender receives a payment from the borrower, he will deposit the portion representing principal into a sinking fund with an annual effective interest rate...
3. How long would it take for S&S Air to pay off the
smart loan assuming 30-year traditional mortgage
payments? Why is this shorter than the time
needed to pay off the traditional mortgage? How
much interest would the company save?
S&S Air’s Mortgage ark Sexton and Todd Story, the owners of S&S Air, Inc., greatest Interest savings. At Todd's prompting, she goes IV Iwere impressed by the work Chris had done on finan on to explain a bullet loan....
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On your student loans, if possible, try to make interest-only
payments while you are still in school. If interest is not repaid,
it folds into principal after graduation and can cost you hundreds
(or thousands) of extra dollars in finance charges. For example,
Sara borrowed $5000 at the beginning of her freshman year and
another $4,000 at the beginning of her junior year. The interest
rate (APR) is 9% per year, compounded monthly, so Sara's
interest accumulates at 0.75% per...
E10-16B (L03,4) (Asset Acquisition) Ogden Industries purchased
the following assets and constructed a building as well. All this
was done during the current year.
Asset 3
This machine was acquired by making a $25,000 down payment and
issuing a $75,000, 1-year, zero-interest-bearing note. The note is
to be paid off in at the end of the first year. It was estimated
that the asset could have been purchased outright for $91,000.
Asset 4
This machinery was acquired by trading in...
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