Assume your real estate business needs to borrow $800,000 to help with building renovations. ANZ offers a
Fantastic news! We've Found the answer you've been seeking!
Question:
Assume your real estate business needs to borrow $800,000 to help with building renovations. ANZ offers a term of 20 years and quotes you an interest rate of 9% p.a., compounding monthly. The loan has constant monthly repayments and the first payment due at the end of the first month.
Required:
- Calculate the effective annual rate?(4 marks)
- Calculate the monthly payment to repay the loan?(4 marks)
- Now assume it is 8 years later and you have just made a normal payment to the bank. Suppose the bank increases the interest to 9.6% p.a. If the loan term remains the same, what is the new monthly payment? Alternatively, if the repayment remains unchanged, estimate the new term loan.(12 marks)
Related Book For
Intermediate Accounting
ISBN: 978-0324592375
17th Edition
Authors: James D. Stice, Earl K. Stice, Fred Skousen
Posted Date: