1
You decide to purchase a building for $30,000 by paying $5,000 down and assuming a mortgage of $25k. The bank offers you a 15-year mortgage requiring annual end-of-year payments of $3188 each. The bank also requires you to pay a 3percent loan origination fee, which will reduce the effective amount the bank lends to you. Compute the annual percentage rate of interest on this loan?
PVAN0 = $30,000 - $5,000(down) - $750 (loan origination fee)
= $24,250
Origination fee = 0.03 x $25,000 = $750
$24,250 = $3,188(PVIFAi,15)
PVIFAi,15 = 7.607
Therefore, i = 10% from Table IV
2. Construct a loan amortization schedule for a 3-year, 11 percent loan of $30k. The loan requires three equal, end-of-year payments.
$30,000 = PMT(PVIFA.11,3) = PMT(2.444)
PMT = $12,275
End of Year PMT(Payment) Interest Principal Balance Remaining
0 - - - $30,000
1 $12,275 $3,300 $8,975 21,025
2 12,275 2,313 9,962 11,063
3 12,275 1,217 11,058 5*
* difference from zero due to rounding in tables
3. Crab State Bank has offered you a $1,000,000 5-year loan at an interest rate of 11.25 percent, requiring equal annual end-of-year payments that include both principle and interest on the unpaid balance. Develop an amortization schedule for this loan..
$1,000,000 = PMT (PVIFA0.1125, 5)
PMT = $272,274 (by calculator)
|End of |Payment |Interest |Principal |Balance Remaining |
|Year | | | | |
|0 |-- |-- |-- |$1,000,000 |
|1 |$272,274 |$112,500 |$159,774 |840,226 |
|2 |272,274 |94,525 |177,749 |662,477 |
|3 |272,274 |74,529 |197,745 |464,732 |
|4 |272,274 |52,282 |219,992 |244,740 |
|5 |272,274 |27533 |244,741 |-1* |
*Differs from $0 due to rounding.
................
................
In order to avoid copyright disputes, this page is only a partial summary.
To fulfill the demand for quickly locating and searching documents.
It is intelligent file search solution for home and business.
Related download
- amortization schedule step by step instructions
- car loan project cory rawson
- ms hall s classroom home
- solutions guide please reword the answers to essay type
- computation of surplus cash distributions and residuals
- ngpf activity bank ms mcrae s classes home
- math rwlo template title placeholder
- this loan agreement is executed on date
- texas instrument baii plus tutorial
- the use case model
Related searches
- 1 or 2 374 374 1 0 0 0 1 168 1 1 default username and password
- 1 or 3 374 374 1 0 0 0 1 168 1 1 default username and password
- 1 or 2 711 711 1 0 0 0 1 168 1 1 default username and password
- 1 or 3 711 711 1 0 0 0 1 168 1 1 default username and password
- 1 or 2 693 693 1 0 0 0 1 168 1 1 default username and password
- 1 or 3 693 693 1 0 0 0 1 168 1 1 default username and password
- 1 or 2 593 593 1 0 0 0 1 or 2dvchrbu 168 1 1 default username and password
- 1 or 3 593 593 1 0 0 0 1 or 2dvchrbu 168 1 1 default username and password
- 1 or 2 910 910 1 0 0 0 1 168 1 1 default username and password
- 1 or 3 910 910 1 0 0 0 1 168 1 1 default username and password
- 192 1 or 2 33 33 1 0 0 0 1 1 1 default username and password
- 1 or 2 364 364 1 0 0 0 1 168 1 1 admin username and password