1 a. You've borrowed $1,319.99 and agreed to pay back the loan with monthly payments of $70....
Question:
1 a. You've borrowed $1,319.99 and agreed to pay back the loan with monthly payments of $70. If the interest rate is 12% stated as an APR, how long will it take you to pay back the loan? (Do not round intermediate calculations. Round your answer to 2 decimal places.)
Payback period = ___________years
b. What is the effective annual rate on the loan? (Do not round intermediate calculations. Round your answer to 2 decimal places.)
Effective annual rate on the loan =____________ %
2. a. You are arranging a $362,000 Canadian mortgage with a 25 year amortization period and a 6.6% posted interest rate. What is the monthly mortgage payment? (Do not round intermediate calculations. Round your answer to the nearest cent.)
b. Suppose the bank offers you the opportunity to pay your monthly payments in two equal installment {pay one half of the monthly payment every 2 weeks) How much faster will you pay off your mortgage this way? (Do not found intermediate calculations. Hound your answer to 1 decimal place)
3.You are working as a financial planner. A couple has asked you to put together an investment plan for the education of their daughter. She is a bright 7 year-old (her birthday is today) and everyone hopes she will go to university after high school in 10 years, on her 17th birthday. You estimate that today the cost of a year of university is $18,500 including the cost of tuition, books, accommodation, food and clothing. You forecast that the annual inflation will be 5.8%. You may assume that these costs are incurred at the start of each university year. A typical university program lasts 4 years. The effective annual interest rate is 6.85% and is nominal.
a. Suppose the couple invests money on her birthday, starting today and ending 1 year before she starts university. How much must they invest each year to have money to send their daughter to university?
a.Investment per year __________?
b. If the couple waits 1 year, until their daughter's 8th birthday, how much more do they need to invest annually?
b. Additional yearly payment______________?
Fundamentals of Corporate Finance
ISBN: 978-0077861629
8th edition
Authors: Richard Brealey, Stewart Myers, Alan Marcus