Find the revised annual payment

Assignment Help Financial Management
Reference no: EM131070489

Seven years go, Jean took out a 20- year 30000 loan at 8% effective on which she was making annual payments, with the first payment due one year after the loan was taken out. She now wishes to make a lump-sum payment of 6000, and then pay off the loan in 5 more years. Find the revised annual payment under each of the following situations:

a) the lender is satisfied with earning 8% effective.

b) the lender is satisfied with 8% effective for the past 7 years, but insists on an 11% yield for the next 5 years.

c) the lender insists on an 11% yield for the entire life of the loan.

Reference no: EM131070489

Questions Cloud

How will the journal entry for this transaction be made : ABC Company accepts a $2,000.00, three month note payable at 12% in settlement of XYZ Company's account receivable. XYZ Company originally owed $1,800.00 for merchandise and $347.00 in finance charges. How will the journal entry for this transaction ..
Fixed rate mortgage to buy new home : You need a 30-year, fixed rate mortgage to buy a new home for $200,000. Your mortgage bank will lend you the money at a 7.5% APR for this 360-month loan. However, you can only afford monthly payments of $1000, so you offer to pay off any remaining lo..
Retirement and have just started your first job : Assume that you have 40 years until retirement and have just started your first job. Once you retire, you anticipate that you will live for 30 additional years. Assume that you will require $100,000 per year to support yourself in retirement.
Stocks with the investments and beta coefficients : Suppose you are the manager of a $10,000,000 investment fund. The fund consists of 4 stocks with the following investments and beta coefficients:
Find the revised annual payment : Seven years go, Jean took out a 20- year 30000 loan at 8% effective on which she was making annual payments, with the first payment due one year after the loan was taken out. the lender is satisfied with earning 8% effective. the lender is satisfied ..
Fixed asset is fully depreciated over the life of project : A five-year project has an initial fixed asset investment of $285,000, an initial NWC investment of $25,000, and an annual OCF of −$24,000. The fixed asset is fully depreciated over the life of the project and has no salvage value. If the required re..
Calculate r the required rate of return : Calculate "r" the required rate of return for each of the following. Assume beta is 1.3 for this and the next two problems, the risk-free rate is 6.5%, and market risk is 10.5%. Now assume the risk-free rate increases to 8% because inflation is expec..
Liquidity is an issue for businesses of all sizes : Liquidity is an issue for businesses of all sizes, but specifically small businesses who may not have (seemingly) unlimited resources like corporate giants. Why is liquidity important? How would you gauge liquidity?
Balance showing in the notes payable account : Alex has noticed a problem with the balance showing in the notes payable account. According to a statement sent by the bank, the note in question has a remaining balance of $76,000.00 while the general ledger shows a $64,000.00 balance. In researchin..

Reviews

Write a Review

 

Financial Management Questions & Answers

  Receives tax-free to redeem stock of deceased shareholder

Mad Golf Inc., a successful C corporation, has three shareholders: Larry, Brice and Joe. All the shareholders are in their early fifties. The company has a redemption buy-sell agreement funded with corporate-owned life insurance. If a shareholder die..

  Compounding period is the same as the payment period

Find the payment that should be used for the annuity due whose future value is given. Assume that the compounding period is the same as the payment period. $79,000; monthly payments for 11 years; interest rate 6.3%.

  Home equity line of credit-tax-deductible meaning

A home equity line of credit (HELOC) is, loosely speaking, like a credit card for your home. You can borrow money by drawing down on the line of credit. But, because the borrowed money is for the purpose of your home, the interest is tax-deductible m..

  Appropriate cost of capital to evaluate the business

Verano Inc. has two business divisions - a software product line and a waste water clean-up product line. The software business has a cost of equity capital of 11% and the waste water clean-up business has a cost of equity capital of 6%. What is the ..

  Nominal rate of return-what is the inflation rate

If your nominal rate of return is 14.38 percent and your real rate of return is 4.97 percent, what is the inflation rate?

  Maximizing shareholder wealth not usually account for

Which of the following does maximizing shareholder wealth not usually account for?

  Complete a project that helps you apply theoretical

complete a project that helps you apply theoretical knowledge of financial planning to practical applications. it is a

  Hedge the exposure of a variable interest rate loan

The financial analysts at Bearings and Nuts Limited a local conglomerate wants hedge the exposure of a variable interest rate loan it negotiated last year. Due to an uncertain economic environment, the fluctuation of local interest rate might affect ..

  What is the free cash flow to the firm

Eagle Products’ EBIT is $480, its tax rate is 40%, depreciation is $24, capital expenditures are $64, and the planned increase in net working capital is $30. What is the free cash flow to the firm?

  Considering expanding the sales of its cappuccino machines

An Italian company is considering expanding the sales of its cappuccino machines to the U.S market. As a result, the idea of a setting up a manufacturing facility in the U.S should be explored. Why APV model is better than NPV model for capital budge..

  What is return on equity and net income

Equity Multiplier and Return on Equity SME Company has a debt-equity ratio of .65. Return on Assets is 8.2%, and total equity is $515,000. What is Return on Equity? What is Net Income ? (skipping Equity multiplier)

  Evaluate the fcf valuation

Explain results of your Market Multiples analysis and reconcile the FCF Valuation results with the Market Multiples Valuation results

Free Assignment Quote

Assured A++ Grade

Get guaranteed satisfaction & time on delivery in every assignment order you paid with us! We ensure premium quality solution document along with free turntin report!

All rights reserved! Copyrights ©2019-2020 ExpertsMind IT Educational Pvt Ltd