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On the 5th of March 2009, the Bank of England (BoE) lowered its main interest rate to 0.5%, the lowest on record since the Bank has published rates in 1970, which still remains unchanged. As a consequence of this low level of rates, HSBC's Lifetime Tracker Special mortgage rate stands at 3.99%. John McEnroe is about to buy a house in the countryside which costs £500,000 and is taking out a 25-year repayment mortgage for 75% of the acquisition value of the house. John has asked you to assess his ability to pay, in case the BoE increases its interest rate, as her maximum monthly payment can not exceed £2,200. You are required to:
1. Calculate the monthly payment John will need to meet under current conditions.
2. Assess the effect on John's monthly payments for each quarter percentage point increase in the BoE rate, up to 4% and identify at which rate John would no longer be able to make the monthly payment.
3. Determine the shortest length (to the nearest month) of mortgage John could take out if he wanted his monthly payment to be exactly the maximum he could afford (based on current mortgage assumptions).
#The following is the existing capital structure of Company XYZ Ltd. Ordinary shares at Shs.10 par 1,000,000 Retained 800,000 12% preference shares Shs.10 par 400,000 16% loan Shs.
Importance of Interest Rates These are of a specifically relevance to a finance manager since: i) They measure the cost of borrowing. ii) Interest rates in a country influen
Distribution Policies Most Recent Fiscal Year Fiscal Year (-1) Fiscal Year (-2) Fiscal Year (-3)
Monitoring Costs - Agency Costs This is incurred to prevent undesirable managerial actions. They are meant to ensure that both parties live to the spirit of agency contract. T
Marginal cost of finance This is cost of new finances or additional cost a company has to pay to raise and use additional finance is given by: (Total cost of marginal finan
Asset Based Valuation This method acquires into account the entire business along with reference to its assets and then divides the resultant value via the number of shares i
Bob and Jackie came to your bank seeking an FHA mortgage. They want to know how large a mortgage they would be qualified for and what the terms would be. Bob is a pastry chef (
Task The following information has been extracted from the accounts of R Ltd., a manufacturer and distributor of home cordless phone in Hong Kong.
Explain about the New Issue Market OR Primary Market New issue market is the segment in which new issues are made. In new issue market, new issues may be made in 3 ways name
what is the price of the share net sales Rs.120lakhs net profit margin 12.5% no. of equity shares 25,000 cost of equity shares 12% retention ratio 40% rate of interest(ROI) 16%
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