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Financial Math
I. A family buys a house worth $326,000. They pay $75,000 deposit and take a mortgage for the balance at J12=9% p.a. to be amortized over 30 years with monthly payments.
A. Find the value of the mortgage on their house?
B. Find the value of the monthly payment?
C. Find the loan outstanding after making 20 payments?
D. Find the principal repaid in the 21st payment?
III. Suppose that after making 50 payments, the interest rate changes to J2=9% p.a.:
A. Convert the interest rate J2=9% to J12 equivalent
B. Assuming that the family seeks to accept the change in interest rates, what would be their new payment based on the new interest rate?
C. Assuming that the family seeks to continue their initial monthly payment calculated in part I, how many full payments would be required to pay off the loan and what would be the final concluding smaller payment one period later?
A. Find the value of the mortgage on their house?
B. Find the value of the monthly payment?
C. Find the loan outstanding after making 20 payments?
D. Find the principal repaid in the 21st payment?
III. Suppose that after making 50 payments, the interest rate changes to J2=9% p.a.:
A. Convert the interest rate J2=9% to J12 equivalent
B. Assuming that the family seeks to accept the change in interest rates, what would be their new payment based on the new interest rate?
C. Assuming that the family seeks to continue their initial monthly payment calculated in part I, how many full payments would be required to pay off the loan and what would be the final concluding smaller payment one period later?
Financial Math
How long will it take for $2800 to be worth $7000 at a rate of 7.8%/ yearly compounded annually
Financial Math
Convert the interest rate J2=9% to J12 equivalent
Financial Math
A family buys a house worth $326,000. They pay $75,000 deposit and take a mortgage for the balance at J12=9% p.a. to be amortized over 30 years with monthly payments.
A. Find the value of the mortgage on their house?
B. Find the value of the monthly payment?
C. Find the loan outstanding after making 20 payments?
D. Find the principal repaid in the 21st payment?
II. Fill out the loan amortization schedule provided in the solution template for the first 5 loan payments. What do you notice about the composition of the payment amount? Ending Loan Balance with Working for each payment:
A. Find the value of the mortgage on their house?
B. Find the value of the monthly payment?
C. Find the loan outstanding after making 20 payments?
D. Find the principal repaid in the 21st payment?
II. Fill out the loan amortization schedule provided in the solution template for the first 5 loan payments. What do you notice about the composition of the payment amount? Ending Loan Balance with Working for each payment:
Financial Math
Suppose that ABC Ltd is considering purchasing one of three new processing machines. Either machine would make it possible for the company to produce its products more efficiently.
Estimates regarding each machine are provided below:
Machine A Machine B Machine C
Original cost $79,000 $110,000 $244,000
Estimated life 7 years 8 years 10 years
Salvage value Nil Nil $30,000
Estimated annual cash inflows $30,000 $ 60,000 $58,500
Estimated annual cash outflows $ 7,000 $ 35,000 $18,500
A. If the projects cannot be repeated, which machine should ABC Ltd choose based on the NPV criteria at an 8% cost of capital? (9 marks)
B. If the projects can be repeated, which machine should ABC Ltd choose based on the NPV criteria at an 8% cost of capital? (6 marks)
C. Calculate the internal rate of return for Machine A? [Hint: internal rate of return is the rate which results in a zero NPV using linear interpolation], and discuss 1 drawback of the IRR against the NPV (5 marks)
Estimates regarding each machine are provided below:
Machine A Machine B Machine C
Original cost $79,000 $110,000 $244,000
Estimated life 7 years 8 years 10 years
Salvage value Nil Nil $30,000
Estimated annual cash inflows $30,000 $ 60,000 $58,500
Estimated annual cash outflows $ 7,000 $ 35,000 $18,500
A. If the projects cannot be repeated, which machine should ABC Ltd choose based on the NPV criteria at an 8% cost of capital? (9 marks)
B. If the projects can be repeated, which machine should ABC Ltd choose based on the NPV criteria at an 8% cost of capital? (6 marks)
C. Calculate the internal rate of return for Machine A? [Hint: internal rate of return is the rate which results in a zero NPV using linear interpolation], and discuss 1 drawback of the IRR against the NPV (5 marks)
Financial Math
. Suppose that after making 50 payments, the interest rate changes to J2=9% p.a.:
A. Convert the interest rate J2=9% to J12 equivalent ?
B. Assuming that the family seeks to accept the change in interest rates, what would be their new payment based on the new interest rate?
C. Assuming that the family seeks to continue their initial monthly payment calculated in part I, how many full payments would be required to pay off the loan and what would be the final concluding smaller payment one period later?
A. Convert the interest rate J2=9% to J12 equivalent ?
B. Assuming that the family seeks to accept the change in interest rates, what would be their new payment based on the new interest rate?
C. Assuming that the family seeks to continue their initial monthly payment calculated in part I, how many full payments would be required to pay off the loan and what would be the final concluding smaller payment one period later?
Financial Math
III. Suppose that after making 50 payments, the interest rate changes to J2=9% p.a.:
A. Convert the interest rate J2=9% to J12 equivalent
B. Assuming that the family seeks to accept the change in interest rates, what would be
their new payment based on the new interest rate?
C. Assuming that the family seeks to continue their initial monthly payment calculated
in part I, how many full payments would be required to pay off the loan and what
would be the final concluding smaller payment one period later?
So Sir, i would i calculate this
A. Convert the interest rate J2=9% to J12 equivalent
B. Assuming that the family seeks to accept the change in interest rates, what would be
their new payment based on the new interest rate?
C. Assuming that the family seeks to continue their initial monthly payment calculated
in part I, how many full payments would be required to pay off the loan and what
would be the final concluding smaller payment one period later?
So Sir, i would i calculate this
Financial Math
A family buys a house worth $326,000. They pay $75,000 deposit and take a mortgage for the balance at J12=9% p.a. to be amortized over 30 years with monthly payments.
A. Find the value of the mortgage on their house? (1 mark)
B. Find the value of the monthly payment? (3 marks)
C. Find the loan outstanding after making 20 payments? (4 marks)
D. Find the principal repaid in the 21st payment? (5 marks)
E. Fill out the loan amortization schedule provided in the solution template for the first 5 loan payments. What do you notice about the composition of the payment amount?
A. Find the value of the mortgage on their house? (1 mark)
B. Find the value of the monthly payment? (3 marks)
C. Find the loan outstanding after making 20 payments? (4 marks)
D. Find the principal repaid in the 21st payment? (5 marks)
E. Fill out the loan amortization schedule provided in the solution template for the first 5 loan payments. What do you notice about the composition of the payment amount?
Financial Math
Your brother has just invested in a discount bond that offers an annual coupon rate of 9%, with interest paid annually. The face value of the bond is $1,000 and the difference between its yield to maturity and coupon rate is 4%. The bond matures in 8 years. What is the bond’s price? *
Financial Math
II. Fill out the loan amortization schedule provided in the solution template for the first 5 loan payments. What do you notice about the composition of the payment amount?
