Problem 1 You have a loan outstanding. It requires making three annual payments at the end...
Problem 1
You have a loan outstanding. It requires making three annual payments at the end of the next three years of $3000 each. Your bank has offered to allow you to skip making the next two payments in lieu of making one large payment at the end of the loan’s term in three years. If the interest rate on the loan is 5%, what final payment will the bank require you to make so that it is indifferent between the two forms of payment?
Homework Answers
Future value of annuity=Annuity[(1+rate)^time period-1]/rate
=3000[(1.05)^3-1]/0.05
=3000*3.1525
=$9457.50
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Problem 1
You have a loan outstanding. It requires making three annual
payments at the end...
You have a loan outstanding. It requires making three annual payments at the end of the...
You have a loan outstanding. It requires making three annual payments at the end of the next three years of $2000 each. Your bank has offered to allow you to skip making the next two payments in lieu of making one large payment at the end of the loan's term in three years. If the interest rate on the loan is 6%, what final payment will the bank require you to make so that it is indifferent between the two...
You have a loan outstanding. It requires making 4 annual payments at the end of the...
You have a loan outstanding. It requires making 4 annual payments at the end of the next 4 years of $8,000 each. Your bank has offered to allow you to skip making the next 3 payments in lieu of making one large payment at the end of the loan's term in 4 years. If the interest rate on the loan is 5.23%, what final payment will the bank require you to make so that it is indifferent between the two...
You have a loan outstanding. It requires making 4 annual payments at the end of the...
You have a loan outstanding. It requires making 4 annual payments at the end of the next 4 years of $ 8 comma 000 each. Your bank has offered to allow you to skip making the next 3 payments in lieu of making one large payment at the end of the loan's term in 4 years. If the interest rate on the loan is 9.63 %, what final payment will the bank require you to make so that it is...
You have a loan outstanding. It requires making three annual payments of $ 6,000 each at...
You have a loan outstanding. It requires making three annual payments of $ 6,000 each at the end of the next three years. Your bank has offered to restructure the loan so that instead of making the three payments as originally agreed, you will make only one final payment in three years. If the interest rate on the loan is 8 %, what final payment will the bank require you to make so that it is indifferent to the two...
You have a loan outstanding. It requires making eight annual payments of $4,000 each at the...
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You have a loan outstanding. It requires making sixsix annual payments of $1,000 each at the...
You have a loan outstanding. It requires making sixsix annual payments of $1,000 each at the end of the next six years. Your bank has offered to restructure the loan so that instead of making the six payments as originally agreed, you will make only one final payment in six years. If the interest rate on the loan is 7 %, what final payment will the bank require you to make so that it is indifferent to the two forms...
You have a loan outstanding. It requires making four annual payments of $7,000 each at the...
You have a loan outstanding. It requires making four annual payments of $7,000 each at the end of the next four years. Your bank has offered to restructure the loan so that instead of making the four payments as originally agreed, you will make only one final payment in four years. If the interest rate on the loan is 7%, what final payment will the bank require you to make so that it is indifferent to the two forms of...
1.You have a loan outstanding. It requires making three annual payments of $ 4,000 each at...
1.You have a loan outstanding. It requires making three annual payments of $ 4,000 each at the end of the next three years. Your bank has offered to restructure the loan so that instead of making the three payments as originally agreed, you will make only one final payment in three years. If the interest rate on the loan is 4 %, what final payment will the bank require you to make so that it is indifferent to the two...
Some banks allow you to skip a loan payment and roll it into your principal. This...
Some banks allow you to skip a loan payment and roll it into your principal. This is especially attractive in January when the Christmas VISA bill arrives. Consider the following simplified example. You renovated your house last year and borrowed $80,000. The term of the loan is three years, the rate is 8% (APR), and the annual (end-of-year) payments are $31,042.68. A year has passed and the first payment is due but you don’t have enough cash. Your bank has...
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You have a loan outstanding. It requires making three annual payments at the end of the next three years of $2000 each. Your bank has offered to allow you to skip making the next two payments in lieu of making one large payment at the end of the loan's term in three years. If the interest rate on the loan is 6%, what final payment will the bank require you to make so that it is indifferent between the two...
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