Question: 2. John opened a bar and plans to ask $200,000 loan for decorating and buying new facilities. Bank suggests two options for financing the loan:

2. John opened a bar and plans to ask $200,000 loan for decorating and buying new facilities. Bank suggests two options for financing the loan: a 20 year mortgage at 4% APR and a 30 year mortgage at 8% APR.

i) What is the difference in monthly payments (for the first 20 years) between these two options?

ii) If John would like to prepay the mortgage (pay the remainder of the loan in a single payment before maturity), how much does he need to pay at the end of 15th year for both options? Assume monthly compounding.

Step by Step Solution

There are 3 Steps involved in it

1 Expert Approved Answer

Step: 1 Unlock blur-text-image

Question Has Been Solved by an Expert!

Get step-by-step solutions from verified subject matter experts

Step: 2 Unlock

Step: 3 Unlock

Students Have Also Explored These Related Finance Questions!

8. In 2012 Ontario Canada offered a 5-year step-up Ontario Savings Bond (OSB) with an interest rate of 1.25 per cent in the first year, 1.50 per cent in the second year, 1.75 per cent in the third...

John opened a bar and plans to ask $200,000 loan for decorating and buying new facilities. Bank suggests two options for financing the loan: a 20 year mortgage at 4% APR and a 30 year mortgage at 8%...

Need Assistance with questions and how to use a financial calculator to solve the questions 1. Holding-Period Returns a. Last year Marla purchased 100 shares of stock for $ 8 per share. She paid a...

John opened a bar and plans to ask for a $200000 loan for decorating and buying new facilities. Bank suggeststwo options for financing the loan: a 20 year mortgage at 4% APR and a 30 year mortgage at...

USE EXCEL John opened a bar and plans to ask $200,000 loan for decorating and buying new facilities. Bank suggests two options for financing the loan: a 20-year mortgage at 6% APR and a 30-year...

Matt plans to ask $200,000 loan for his business. Bank suggests two options for financing the loan: 1. a 20 year mortgage at 4% APR or; 2. a 30 year mortgage at 8% APR. i) What is the difference in...

Sara opened a bar and plans to ask $200,000 loan for decorating and buying new facilities. Bank suggests two options for financing the loan: a 20 year mortgage at 4% APR and a 30 year mortgage at 8%...

I need Chapter 2 & 3 finished. Chapter 4 & 5, Chapter 6 & 7, & Chapter 8. Some of this is completed, but it isn't 100% finished. Let me know if you can get to it. Personal Finance, Fifth Edition by...

Hyatt's Problem Just what I don't need groaned Valerie Ferguson as she hung up the phone late one cold afternoon in December of 1993. Bad enough the weather stinks, and it gets dark by 4:30P, now...

I need chapters 18, 19, 20, and 21 for the workbook for Personal Finance by Madura!! Please help!!! Personal Finance, Fifth Edition by Jeff Madura BUILDING YOUR OWN FINANCIAL PLAN WORKBOOK INDEX...

A rod having a diameter of 2 cm and a length of 10 cm has one end maintained at 200ºC and is exposed to a convection environment at 25ºC with h = 40 W/m2 · ºC. The rod generates...

When the algebraic method of allocating support department costs is used, total costs for each support department increase from what they were prior to the allocation. Why does this occur, and how...

In the figure, AABC is an isosceles triangle in which AB = AC and BC = 20. If CBF = 50 and BCD = 60, find CDF. A D 20 50" 66) B C

Let R be the region bounded by the following curves. Use the method of your choice to find the volume of the solid generated when R is revolved about the y-axis. y = x, y = 3x+ 3, x= 3, and x = 6 The...

Supply chain is important for any business operations. Draw a supply chain network (suppliers, manufacturer, distributors, retailers etc.) of Thank You Water company and Hard Rock Cafe. Describe the...

Let R be the region bounded by the following curves. Use the shell method to find the volume of the solid generated when R is revolved about the y-axis. 311-, %3D0, %3D3, and x %3D5 Set up the...

Define supply chain, logistics, and distribution management. Draw a simple product supply chain network (from Supplier to customer). What are the roles of 3PLs in supply chain? Visit a 3PL company...

Phillip, age 66, developed hip problems and was unable to climb the stairs to reach his second-floor bedroom. His physician advised him to add a first-floor bedroom to his home. The cost of...

Determine if the overhead allocated to the product relates to a single plantwide overhead rate method, multiple production department factory overhead rate method, or activity-based costing...

2-3. Employers use various defenses against discrimination allegations. Here employers need to distinguish between disparate treatment (intentional discrimination) and disparate impact (a policy that...

2-4. All managers play an important role in the EEOC enforcement process. The basic steps in this process include filing the charge, charge acceptance by the EEOC, serving notice on the employer, the...

2-2. Equal employment law continues to evolve, with important new legislation enacted since 19901991. The Civil Rights Act of 1991 reversed the effects of several Supreme Court rulingsfor instance,...