You are purchasing a home for $ 395,000. The loan requires a down payment of 15% of the purchase price. There are no other fees. The rest will be borrowed through a 7.35% (CIA ) amortized loan with annual payments for 20 years. What will the annual payment be on the loan?

You are purchasing a home for $ 395,000. The loan requires a down payment of 15% of the purchase price. There are no other fees. The rest will be borrowed through a 7.35% (CIA ) amortized loan with annual payments for 20 years. What will the annual payment be on the loan?

EBK CONTEMPORARY FINANCIAL MANAGEMENT

14th Edition

ISBN:9781337514835

Author:MOYER

Publisher:MOYER

Chapter19: Lease And Intermediate-term Financing

Section: Chapter Questions

Problem 14P

See similar textbooks

Related questions

Q: The following three defense stocks are to be combined into a stock Index in January 2022 (perhaps a…

A: A stock index is a performance tracking metric of the equity markets that takes into account the…

Q: For each of the following annuities, calculate the future value. Note: Do not round intermediate…

A: Annual paymentYearsInterest Rate$1,520109%$6,5403410%$3,64097%$8,3303611%

Q: A mortgage of $38,000 is repaid by making payments of $270 at the end of each month for 13 years.…

Q: Slow Roll Drum Company is evaluating the extension of credit to a new group of customers. Although…

A: Accounts receivable refers to the outstanding payments that a business is owed by its customers or…

Q: U.S. Steel is considering a plant expansion to produce austenitic, precipitation hardened, duplex,…

A: TVM refers to the capacity of money to earn interest because money earned earlier is considered more…

Q: A proposed cost-saving device has an installed cost of $690,000. It is in Class 8 (CCA rate = 20%)…

A: Step 1: Calculate Annual CCAAnnual CCA (Capital Cost Allowance) = Installed Cost x CCA Rate Annual…

Q: A couple would like to accumulate $20,000 in 3 years as a down payment on a house, by making…

A: Given : Amount = 20000Time = 3yearsRate of Interest = 12% with monthly compounding

Q: 18 A company has a machine which will continue to function for the next five years, but gradually…

A: The objective of this question is to calculate the net present value (NPV) of the proposal to…

Q: As of November 1, 1999, the exchange rate between the Brazilian real and U.S. dollar is R$1.99 per…

A: Current spot rate=R$1.99/$Inflation Brazil=20%US inflation=2.7%Find out one year forward rate.

Q: Stocks A and B have the following probability distributions of expected future retums: Probability…

A: The expected return of an investment is the anticipated gain or loss from that investment, expressed…

Q: Even though most corporate bonds in the United States make coupon payments semiannually, bonds…

A: Current Bond Price:The current bond price is the current market price of a bond, which is a type of…

Q: "You manage a risky portfolio with an expected rate of return of 11% and a standard deviation of…

A: Return on risky portfolio = 11%Standard deviation (SD) = 37%T-bill return = 4%Expected return on…

Q: Assume that you manage a risky portfolio with an expected rate of return of 17% and a standard…

A: Investment in stock refers to an amount that is being invested by investors for the purpose of…

Q: A property gets following Cash flows: NO = 100,000 growing by 3% first I 1 year, 4% Second year,…

A: The objective of the question is to calculate the present value of the cash flows from the property.…

Q: Fill in the missing numbers for the following income statement. (Do not round intermediate…

A: a. OCF$203,900b. Depreciation Tax Shield$25,250Explanation:We should fill the missing numbers for…

Q: Nikita Enterprises has bonds on the market making annual payments, with nine years to maturity, a…

A: Time to maturity = 9 yearsPar value = $1,000Current price = $966Market yield = 6.8%To find: Coupon…

Q: Madetaylor Inc. manufactures financial calculators. The company is deciding whether to introduce a…

A: Ovpportunity cost refers to the potential benefit that is foregone when one alternative is chosen…

Q: efficient of variation. Do not round intermediate calculations. Round your answers to two decimal…

A: The market risk premium, often referred to simply as the "risk premium," is a key concept in finance…

Q: A firm that purchases electricity from the local utility for $300,000 per year is considering…

A: Electricity from local utility costs = $300,000 per yearInstallation cost of generator =…

Q: Kelly found US$140 in her attic and sold it to a bank that charged her a commission of 0.35%. How…

A: Foreign exchange, often abbreviated as forex or FX, refers to the global marketplace where…

Q: Discuss any current financial issues that affect the operating environment of the MNC distibuting…

A: Identify Financial Issue: Recognize current financial challenges such as exchange rate,…

Q: You want to have $1 million to use for retirement in 35 years. If you can earn 1% per month, how…

A: Future Value (FV) of amount required = $1 million or $1,000,000Monthly interest rate (r) = 1% or…

Q: Problem 6-30 Credit Risk (LO4 a. Many years ago, Castles in the Sand Incorporated issued bonds at…

A: Face value = $1,000Coupon rate = 5.6%Years to maturity = 5 yearsYTM = 13%Investors will receive only…

Q: earn a high rating from the bond rating agencies, a company would want to have: (check all that…

A: Credit rating or bond rating agencies rate a company based on its ability to meet debt obligations.A…

Q: Peak Industrial Corp. recently secured a loan to fund its new manufacturing facility. As part of the…

A: The accounting treatment of financing costs paid by a business to get a loan is at the center of the…

Q: Assume that most of the investors in the stock market are active in an online chat group.As one of…

A: Stock ABC's Expected Return• Capital Asset Pricing Model (CAPM) calculates 7.56% return.• Online…

Q: Based on economists' forecasts and analysis, 1-year Treasury bill rates and liquidity premiums for…

A: R1 = 0.55%E(2r1) = 1.70%E(3r1) = 1.80%E (4r1) = 2.10%L2 = 0.08%L3 = 0.12%L4 = 0.14%

Q: Explain the three factors that determine the intrinsic, or economic, value of an asset.

A: The intrinsic value of an asset is its fundamental worth or true value based on its cash flows,…

Q: The real risk - free rate is 1.85 % . Inflation is expected to be 2.85% this year, 4.15% next year,…

A: Risk-free rate = 1.85%Inflation expected this year = 2.85%Inflation expected next year =…

Q: Required: a. What proportion, y, of the total investment should be invested in your fund? b. What…

A: The expected return is a useful tool for estimating the potential average profit or loss on an…

Q: Beta Company re-invests all of its earnings to fund growth, so they expect to pay no dividends for…

A: The price of Beta Company's stock today, given the provided conditions, is approximately $10.13.…

Q: U.S. Treasury STRIPS, close of business February 15, 2019: Maturity Price Maturity Price Feb 2020…

A: A STRIP, or Separate Trading of Registered Interest and Principal Securities, is a financial product…

Q: Suppose you are 30 and have a $115,000 face amount, 20-year, limited-payment, participating policy…

A: Cost of insurance refers to the fees which are associated with the various insurances such as life…

Q: The projected cash flows from these two alternatives are shown below. The owner of the restaurant…

A: Net present value:NPV is a crucial tool for decision-making in capital budgeting, enabling…

Q: A 25-year bond with a par value of 1,000 and 10% coupons payable quarterly is selling at 925.…

A: Maturity period25Payments per year4Annual coupon rate10%Par value1000Selling price925

Q: The following table shows the prices of a sample of Treasury bonds, all of which have coupon rates…

A: The objective of the question is to calculate the interest rates for different maturity periods and…

Q: Consider the information on the market, the risk-free asset, and a mutual fund. You want to build a…

A: The objective of the question is to find the weight of the market portfolio in a two-asset portfolio…

Q: For each of the following annuities, calculate the annual cash flow: Note: Do not round intermediate…

A: An annuity is a series of periodic payments paid/received in exchange for a lump sum payment. It is…

Q: Suppose Taylor's guitars is considering whether it wants to pay its distributor early to receive a…

Q: a) An investor is given the following information: Payoff State 1 State 2 Security Market prices…

A: Replicating Payoffs with the Use of Arrow-Debreu Securities: a) Approach and Fundamental…

Q: Problem 6-24 Interest Rate Risk (LO3) Consider two bonds, a 3-year bond paying an annual coupon of…

A: This scenario analyzes how rising interest rates affect the prices of two bonds: a three-year bond…

Q: Stock A has an expected return of 13.52 percent. Stock B has an expected return of 9.24 percent.…

A: The concept in question is based on the Capital Asset Pricing Model (CAPM), a finance theory used to…

Q: On December 31, 2023, Berclair Incorporated had 400 million shares of common stock and 14 million…

A: Answer:- Earnings per share:- EPS is the ratio between the net profit and outstanding shares of the…

Q: 35. "Your work" as defined by the CGL policy includes O a. only the work of the named insured. ob.…

A: The topic concerns understanding the scope of coverage provided by a Commercial General Liability…

Q: A leading AI technology firm ATOOL, is publicly traded on the US stock market with shares currently…

A: CFFA = $6,470Explanation:Cash Flow from Assets (CFFA)CFFA = EBIT + Depreciation - Capital…

Q: The current U.S. dollar-yen spot rate is 150\/$. If the 90-day forward exchange rate is 148 ¥/$ then…

A: Foreign exchange rate refers to the rate at which the two currencies get swapped for one another, it…

Q: Amalgamated Industries is expected to pay the following dividends over the next three years: $1.75,…

A: “Since you have asked multiple questions, we will answer the first question for you. If you want any…

Q: Company Name Ticker Instructions at bottom Average Median Brinker Bloomin' Brands Domino's Pizza…

A: The objective of this question is to analyze the financial performance of various restaurant…

Q: ABC Inc. has distributed a $1.31 annual dividend to its stockholders. For the following seven years,…

A: The objective of the question is to calculate the value of the stock of ABC Inc. for an investor who…

Q: The following table shows the average returns for some of the largest mutual funds commonly found in…

A: Present value refers to the value that are being invested in an asset today that will be available…

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

You are purchasing a home for $
395,000. The loan requires a
down payment of 15% of the
purchase price. There are no
other fees. The rest will be
borrowed through a 7.35% (CIA
) amortized loan with annual
payments for 20 years. What will
the annual payment be on the
loan?

Expert Solution

This question has been solved!

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

SEE SOLUTION Check out a sample Q&A here

Step 1: Explanation of a mortgage

VIEW

Step 2: Calculation of the annual payment on the loan

VIEW

Solution

VIEW

Step by step

Solved in 3 steps with 1 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

you wish to purchase real property. the lender will give you a 250000 fixed rate 30 year mortgage at 3.5% per annum. suppose that before you can make any payments you receive a pay raise so you can pay an extra 200 per month with your normal payment. how many payments are required to fully amortize the loan assuming the extra 200 is paid each month?
If you take out an amortized loan of $33,000 with a 14 year term and 7.4% interest rate, what are the annual payments you need to make? Round to the nearest dollar.
there is a house on sale for $800,000. You believe you can finance the home for $500,000 for 20 years at a 2% interest rate. What would the monthly principle and interest payment be for the acquird loan? Calculate using the PV funtion in excel.
You have just purchased a new warehouse. To finance the purchase, you've arranged for a 30-year mortgage loan for 80 percent of the $2,200,000 purchase price. The monthly payment on this loan will be $12,000. a. What is the APR on this loan? Annual percentage rate b. What is the EAR? Effective annual rate
A borrower is purchasing a property for $1,800,000 and can choose between two possible loan alternatives. The first is a 75% loan for 25 years at 9% interest and 1 point and the second is an 80% loan for 25 years at 9.25% interest and 1 point. Assume the loan term will be 5 years. What is the incremental cost of borrowing the extra money?
A borrower is purchasing a property for $200,000 and can choose between two possible loan alternatives. Loan A is a 90% loan for 25 years at 8% interest and 2 points and Loan B is a 95% loan for 25 years at 8.75% interest and 1 point. Assume the loans will be held to maturity, what is the incremental cost of borrowing the extra money? Assume that the loans will be repaid in 5 years. What is the incremental cost of borrowing the extra money? Rework parts (a) and (b) assuming the lender is charging 3 points on Loan A and 2 point on Loan B. What is the incremental cost of borrowing?
You want to buy a $226,000 home. You plan to pay 5% as a down payment, and take out a 30-year loan at 6.55% interest for the rest. a) How much is the loan amount going to be? b) What will your monthly payments be? c) How much of the first payment is interest?
You have just purchased a new warehouse. To finance the purchase, you have arranged for a 30-year mortgage loan for 80 percent of the $2,700,000 purchase price. The monthly payment on this loan will be $13,400. What is the APR on this loan? The EAR?
Suppose you wish to purchase heavy equipment machinery and a commercial bank will lend you $65,000 for the transaction. The loan will be amortized over 5 years and the nominal interest rate will be 8% payable monthly. Calculate the monthly payment and the annual percentage rate (EAR) of the loan to be amortized.
Suppose you intend to purchase a house worth $239,900 with a 30-year fixed rate mortgage. You have a down payment of 15%. (a) How much are you planning to finance? (b) Find the monthly payment needed to amortize the loan, at a rate of 2.4% compounded monthly. (c) Approximately how much of the loan will remain after 12 years?
You have just purchased a new warehouse. To finance the purchase, you’ve arranged for a 30-year mortgage loan for 80 percent of the $3,500,000 purchase price. The monthly payment on this loan will be $15,100. What is the APR on this loan? The EAR?
Assume you are purchasing an income-producing property for $10,000,000. The estimated NOI in the next year is $600,000. A lender is willing to provide a mortgage with an annual interest rate of 4.0%. Payments will be made monthly based on a 30-year amortization schedule. The lender requires a minimum debt coverage ratio of 1.25. Based on this required minimum debt coverage ratio, what is the largest loan the lender is willing to make (rounded to the nearest dollar)? Assume the lender will not allow the loan to exceed 85% of the acquisition price under any circumstances. $8,500,000 O $8,478,000 O None of the selections is within a $2 of the correct answer O $8,378,450 O $13,964,083