5. Janet and Mercy want to borrow $50,000 for 120 days to finance their business. SecurityBank charges 11% exact interest while State Savings and Loan charges 12.5% ordinaryinterest.5a) What is the maturity value at Security Bank?5a) What is the maturity value at State Savings and Loan?5c) Which is the better buy6. Bank A charges ordinary interest, while bank B charges exact interest. Susan Carsten wantsto borrow $11,000 for 90 days at 9%.6a) How much interest is charged at bank A?6a) How much interest is charged at bank B?6c) Which bank offers a better deal?7. George Duda has an option to lend $5,000 at 10% interest for 120 days.7a) If he charges ordinary interest, how much will he earn?7b) If he charges exact interest, how much will he earn?

When the lender lends a loan to the borrower, he charges a rate of interest on the borrowed amount.…

Answered: 5. Janet and Mercy want to borrow…

EBK CONTEMPORARY FINANCIAL MANAGEMENT

14th Edition

ISBN:9781337514835

Author:MOYER

Publisher:MOYER

Chapter16: Working Capital Policy And Short-term Financing

Section: Chapter Questions

Problem 14P

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I need help for D, E, and G please You are a loan officer at the West Elm Savings and Loan. Mr. and Mrs. Brady are in your office to apply for a mortgage loan on a house they want to buy. The house has a market value of $170,000. Your bank requires 1/5 of the market value as a down payment. (a) What is the amount (in $) of the down payment? $ (b) What is the amount (in $) of the mortgage for which the Bradys are applying? $ (c) Your bank offers the Bradys a 30 year mortgage with a rate of 5%. At that rate, the monthly payments for principal and interest on the loan will be $5.37 for every $1,000 financed. What is the amount (in $) of the principal and interest portion of the Bradys' monthly payment? $ (d) What is the total amount (in $) of interest that will be paid over the life of the loan? $ (e) Your bank also requires that the monthly mortgage payments include property tax and homeowners insurance payments. If the property tax is $1,710 per…
3. Ruth Brown wants to borrow $2,600 for 90 days to pay her real estate tax. State Savings and Loan charges 7.25% ordinary interest while Security Bank charges 7.5% exact interest 3a. What is the maturity value of each loan? 3b. Where should they borrow the money? 4. You have a chance to lend $6,500 at 5.25% interest for 95 days 4a. If you charge ordinary interest, how much will you earn? 4b. If you charge exact interest, how much will you earn? 4c. If you were borrowing the money, would you prefer to pay ordinary interest or exact interest? Why?
4. What is the purpose of a bridge loan? 5. Distinguish between bank discount and simple interest.6. Differentiate between a stated rate of interest and an effective rate of interest. 7. What is the significance of finding the internal rate of return (IRR)? 8. Jill Kramer borrowed $25,000 to pay for a startup business. Jill must repay the loan at the end of five months in one payment with a 6 percent simple interest rate.What is the total amount that Jill must repay in five months?How much interest does Jill repay?9. Joe Jones went to his bank to find out how long it will take for $1,000 to amount to $1,350 at 9 percent simple interest. Solve Joe's problem.
5. Distinguish between bank discount and simple interest.6. Differentiate between a stated rate of interest and an effective rate of interest. 7. What is the significance of finding the internal rate of return (IRR)? 8. Jill Kramer borrowed $25,000 to pay for a startup business. Jill must repay the loan at the end of five months in one payment with a 6 percent simple interest rate.What is the total amount that Jill must repay in five months?How much interest does Jill repay?9. Joe Jones went to his bank to find out how long it will take for $1,000 to amount to $1,350 at 9 percent simple interest. Solve Joe's problem.
A4) Finance Your bank's current maximum combined loan-to-value is 80%. Joseph is purchasing a home from Mr. and Mrs. Silva for $160,000. Joseph has $32,000 in cash for a down payment and the Silvas have negotiated a seller carryback loan in the amount of $28,000. What is the maximum allowable loan amount?
SOLVE FOR NUMBER 4 ONLY 3. Citibank pays 9% ordinary simple interest on a 30-day time deposit. If Gino deposits Php 1 500.00, how much will he have using:a. Exact interest b. Ordinary interest 4. After solving the problem in number 3, what conclusion can you draw between ordinaryand exact interest? If you are the banker, what kind of interest will you use and why?How about if you are the depositor?
Someone needs to borrow $14,000 to buy a car and the person has determined that monthly payments of $300 are affordable. The bank offers a 3-year loan at 6% APR, a 4-year loan at 6.5%, or a 5-year loan at 7% APR. Which loan best meets the person's needs? Explain. Which loan best meets the person's needs? (Round to the nearest cent as needed.) O A. The second loan best meets the person's needs because the monthly payment of $ amount of $300 per month. OB. The third loan best meets the person's needs because the monthly payment of $ of $300 per month. OC. The first loan best meets the person's needs because the monthly payment of $ of $300 per month. OD. None of the loans meet the person's needs. is less than the maximum budgeted is less than the maximum budgeted amount is less than the maximum budgeted amount
Someone needs to borrow $14,000 to buy a car and the person has determined that monthly payments of $300 are affordable. The bank offers a 3-year loan at 6% APR, a 4-year loan at 6.5%, or a 5-year loan at 7% APR. Which loan best meets the person's needs? Explain. ... Which loan best meets the person's needs? (Round to the nearest cent as needed.) O A. The second loan best meets the person's needs because the monthly payment of $ is less than the maximum budgeted amount of $300 per month. O B. The third loan best meets the person's needs because the monthly payment of $ is less than the maximum budgeted amount of $300 per month OC. The first loan best meets the person's needs because the monthly payment of S is less than the maximum budgeted amount of $300 per month. O D. None of the loans meet the person's needs.
Someone needs to borrow $14,000 to buy a car and the person has determined that monthly payments of $300 are affordable. The bank offers a 3-year loan at 7% APR, a 4-year loan at 7.5%, or a 5-year loan at 8% APR. Which loan best meets the person's needs? Explain. Which loan best meets the person's needs? (Round to the nearest cent as needed.) OA. The third loan best meets the person's needs because the monthly payment of $ OB. The second loan best meets the person's needs because the monthly payment of $ OC. The first loan best meets the person's needs because the monthly payment of $ OD. None of the loans meet the person's needs. is less than the maximum budgeted amount of $300 per month. is less than the maximum budgeted amount of $300 per month. is less than the maximum budgeted amount of $300 month per
Scenario 2.Suppose that you withdraw ₱ 1,500.00 from your savings account. Over theweekend, several people want to borrow money from you. Read the stories anddecide to whom you will lend your money.Story1. Your younger sister is having a garage sale. She needs cash to makechange for the day. She will sell you a bond for ₱ 1,000.00 You will keep thebond for a week, and she promises to pay you back.Story2. Your older brother has a small business idea but doesn’t have anymoney. He wants to borrow your ₱ 1,500.00 and promises to pay you back ₱1,800.00 in four weeks.Story3. Your best friend at school, whom you know very-well, wants to borrowyour ₱ 1,500.00 to buy cupcakes. She plans to sell at a higher price andpromises to pay you back ₱1,700.00 in two weeks.Whose bonds will you buy? Why?
Jassim is a Credit Officer with Riffa Bank and is working on structuring a loan facility for his client. The Bank uses Return on Net Funds Employed to price its loan: Bank policy dictates that loans must generate an 10%6 Rate of Return. Additional loan expenses on this facility will be BHD5,000. How much will Riffa Bank earn from a BHD300,000 loan for 1 year. O a. BHD 30,000 O b. BHD35,000 O C. BHD 40,000 O d. BHD 50,000
K Which loan best meets the person's needs? (Round to the nearest cent as needed.) Someone needs to borrow $16,000 to buy a car and the person has determined that monthly payments of $300 are affordable. The bank offers a 4-year loan at 7% APR, a 5-year loan at 7.5%, or a 6-year loan at 8% APR. Which loan best meets the person's needs? Explain. ... OA. The first loan best meets the person's needs because the monthly payment of $ amount of $300 per month. B. The second loan best meets the person's needs because the monthly payment of $ amount of $300 per month. KOMENTAR OC. The third loan best meets the person's needs because the monthly payment of $ amount of $300 per month. D. None of the loans meet the person's needs. ch is less than the maximum budgeted is less than the maximum budgeted is less than the maximum budgeted

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