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Daniel Pascoe has just purchased a new home for $350,000. Mr Pascoe has obtained financing for the new home from Lenapah Federal Savings under a loan program designed for professionals who wish to purchase homes they cannot afford. Under the terms of the loan, referred to as 3/25 variable rate mortgage, Mr. Pascoe will be permitted to borrow the full $350,000 purchase price of the home. Although the “3/25” requires that Mr. Pascoe pay off the loan over a 25-year period, the first 36 monthly mortgage payments are determined as if the loan were to be amortized (paid off) over 25 years at a monthly compounded rate of 3.6 percent. At the end of three years (36 payments), the interest rate on the loan will be reset to a monthly compounded rate of 7.2 percent, with the outstanding balance of the loan to be paid off over the remaining term of the loan (22 years). Assuming that Mr. Pascoe makes his monthly payments as scheduled during the first three years of the loan term, determine
a. the initial monthly payment on the loan
b. the new monthly payment at the end of three years if the interest rate of the loan is reset to a monthly compounded rate of 7.2 percent.
A stock is expected to pay a dividend of $1.50 per share in 2 months and 5 months. The stock price is $50, risk free rate is 8%. An investor has taken a long position in a 6 month forward contract on a stock. What is the forward price?
Given the infinite time horizon, the value of stock can be described as _____________________________
What is the EFN to achieve the projected 50% growth rate (change the Notes Payable, Long-term debt, and common equity to make the balance sheet balanced)?
1 steve would like to buy a new car but must complete a two-year commitment to the peace corp before he will drive the
If you invest $3,377 today in an account earning 15.12% interest and leave the account unmolested for 35 years; how much will be in the account at the end of the 35 years?
Boeing Aircraft LLP, a manufacturer of rubber-band powered drones, forecasts total fund requirements for the next calendar year as follows: What is the permanent component of the monthly funds requirement, and its monthly average. What is the seasona..
A stock is expected to pay a dividend of $2.40 per share in 1 months and in 4 months. The current stock price is $51, and the risk-free interest rate is 7% per annum with continuous compounding for all maturities. An investor has just taken a long po..
Suppose that a person won the Florida lottery and was offered a choice of two prizes: (1) $500,000 or (2) a coin-toss gamble in which he or she would get $1 million if a head were flipped and zero if a tail. What is the expected dollar return on the ..
Broussard Skateboard's sales are expected to increase by 25% from $8.0 million in 2013 to $10.00 million in 2014. Its assets totalled $4 million at the end of 2013. Broussard is already at full capacity, so its assets must grow at the same rate as pr..
A 25-year maturity bond has a 9% coupon rate, paid annually. It sells today for $1,027.42. Calculate the annual return for the 25-year maturity bond over the next five years
You work for a nuclear research laboratory that is contemplating leasing a diagnostic scanner (leasing is a very common practice with expensive, high-tech equipment). The scanner costs $6,300,000, and it would be depreciated straight-line to zero ove..
Go to a financial Web site, such as finance.yahoo.com, google.com/finance, or moneycentral.msn.com. Obtain information on the yields and maturity for: U.S. treasuries, Municipal bonds, Corporate bonds
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