Answered: Consider a loan of 1,000,000 which is…

Consider a loan of 1,000,000 which is to be amortized by 60 monthly payments. The interest rate is 10% converted monthly. How much is the outstanding balance after the 46th payment?

Corporate Fin Focused Approach

5th Edition

ISBN:9781285660516

Author:EHRHARDT

Publisher:EHRHARDT

Chapter4: Time Value Of Money

Section4.17: Amortized Loans

Problem 1ST

See similar textbooks

Related questions

Q: Explain the mortgage bond.

A: Mortgage bonds are type of corporate bonds. Businesses issue corporate bonds, which normally have…

Q: Use the compound interest formula A = P(1 + r)' and the given information to solve for t. 201 A=…

A: To calculate the value of T we will use the below formula A = P*(1+r)T Where A - Accumulated…

Q: On January 1, Zonoz, Inc. issued a 10-year semiannual bond with a face value of $590,000 that pays…

A: As asked in the question to calculate using excel, so we will use the formula in excel and the snip…

Q: how does crowdfunding work size of crowdfunding stages of crowdfunding

A: Crowdfunding is referred as the practice for the project funding or venture through raising the…

Q: What lump sum do parents must deposit at a 10% annual interest rate, compounded annually, in order…

Q: A zero-coupon bond with 20 years remaining to maturity has a duration of ____________ years, and a…

A: Solution:- Duration is the immunization period, where price effect becomes equal to reinvestment…

Q: Suppose Dassie Bank quoted the exchange rate of Singapore dollar in US$ at $0.60, the pound rate in…

A: Foreign exchange currency rates are those rates which are used for exchange of one foreign currency…

Q: Truffles Chocolate Factory has decided to expand. Last year, the company paid TCC; a marketing…

A: NPV is a technique under Capital budgeting which help in decision making on the basis of future cash…

Q: (Yield-To-Maturity) for $990. You have just bought a 5% coupon $1,000 face-value bond with 3 years…

A: Given: Particulars Years(NPER) 3 Coupon rate 5% Par value $1,000 Current Price (PV)…

Q: Describe how financial leverage can increase return on owners’ equity.

A: Leverage is the use of the leverage (borrowed capital) to increase the profits on an investment or…

Q: old's Gym wants to offer its clients a monthly payment option on its annual membership dues of $490.…

A: Annual membership can be converted into monthly membership depending the on period and interest rate…

Q: A JBH share has just paid a dividend of $1.25 per share. This dividend is expected to grow at a rate…

A: The Supernormal Growth Model is the model in which the value of the stock is measured through its…

Q: PLEASE DO THIS TYPEWRITTEN AND SKIP IT IF YOU HAVE ALREADY DONE THIS, OTHERWISE DOWNVOTE. I WILL…

A: The question is related to Capital Budgeting. 1. Payback Period is the length of time required to…

Q: The conceptual framework underpinning the regulation of published financial statements, states…

A: Financial statements of a company is prepared for external users. Financial statements of a company…

Q: Related to Checkpoint 9.4) (Bond valuation) A bond that matures in 8 years has a $1,000 par…

A: Given: Particulars Years 8 Coupon rate 13% Par value(FV) $1,000 Yield to maturity 16%

Q: A person deposits a sum of Rs. 20,000 at the interest rate of 18% compounded annually for 10 years…

A: Given: Deposit amount=Rs 20,000=P interest rate=18% compounded annually =I duration=10 years=N To…

Q: Face value=$1000 Annual coupon payment=$60 (First payment due in 1 year) Internal yield to…

A: Solution:- Macaulay’s Duration measures the immunizing period i.e. the period where price effect is…

Q: A property was purchased for $7060 00 down and payments of $1451.00 at the end of every year for 3…

A: Present value of annuity Annuity is a series of equal payment at equal interval over a specified…

Q: One university needs some maintenance. The owner of the university decides to deposit $400000 in an…

A: Present worth can be calculated as below Present worth = Cash flow / (1+r)^n It can also be…

Q: Receivables Investment Medwig Corporation has a DSO of 37 days. The company averages $9,750 in…

A: Accounts Receivables are the money due towards customers but not yet paid on account of goods sold…

Q: National Corporation expects to pay a dividend of P5 per share at the end of year one, P9 per share…

A: The most latest price at which a security was sold on an exchange is the current price. Buyers and…

Q: A bond with 15 years to maturity, a face value of $1000, pays a coupon rate of 14% APR compounded…

A: Solution:- Yield-to-maturity means the rate of return earned by bond holder, if the bond is hold…

Q: The next dividend payment by Modern Building Ltd will be $1.50 per share. The dividends are…

A: We will apply the concept of dividend discount model here. As per the dividend discount model the…

Q: PLEASE DO THIS TYPEWRITTEN AND SKIP IT IF YOU HAVE ALREADY DONE THIS, OTHERWISE DOWNVOTE. I WILL…

A: The question is related to Capital Budgeting. 1. Payback Period is the length of time required to…

Q: Which one of these is a characteristic of a sensible payout policy? Set the dividends high even if…

A: The ways in which corporations return capital to their equity owners is known as payout policy.…

Q: Consider a loan of 800,000 which is to be amortized by 60 monthly payments. The interest rate is 12%…

A: Solution:- When an amount is borrowed, it can either be repaid as lump sum payment or in…

Q: At year end, National Corporation balance sheet showed total assets of P70,000,000, total…

A: Given: Total assets = P70,000,000, Total liabilities = P35,000,000 Preferred share capital =…

Q: e If the U.S. dollar appreciates relative to the MXN (Mexican peso) over time, the dollar cost to a…

A: Currency appreciation will impact on the export and import in export prices will increase but in…

Q: Suppose that the relevant equilibrium model is the CAPM with unlimited borrowing and lending at a…

A: a) Security Market Line (SML) is the graphical representation of the Capital Asset Pricing Model…

Q: Describe the three methods used to ensure that funds are available to redeem corporate bonds at…

A: Debt instruments issued by private and public businesses are known as corporate bonds. Companies…

Q: Enterprise, Inc. bonds have an annual coupon rate of 14 percent. The interest is paid semiannually…

A: Here, Coupon rate is 14% Time Period is 13 years Par Value is $1,000 YTM is 8%

Q: Sally is 25 years old and has decided to start a retirement program. Beginning in exactly one year,…

A: We need to use future value of ordinary annuity formula to calculate total saving value at the time…

Q: Weber Interstate Paving Co. had $450 million of sales and $225 million of fixed assets last year, so…

A: Solution:- When an asset is sold, there is cash inflow due to sale proceeds. On the other hand, when…

Q: 0% 5.4%

A: Bonds are intimately associated with the term "yield-to-maturity," which is stated as an annualized…

Q: Suppose your firm’s credit rating is B-, and outlook is negative, not easy to raise finance through…

A: Equity and debts are the two sources of financing available in capital markets. It is generally…

Q: Ivanna wants to save money to buy a motorcycle. She invests in an ordinary annuity that earns 5.4%…

A: Solution:- When an equal amount is saved each period at end of period, it is called ordinary…

Q: x-person has payment eds to 00 every year at the end of each next eleven years. W e amount of Ahmed…

A: Future value includes the amount being deposited and amount of interest being accumulated over the…

Q: How do you find the terminal value using the EV/EBITDA exit multiples

A: TV evaluates a company's worth in perpetuity beyond a predetermined predicted period—typically five…

Q: How much should be deposited in an account that will earn at an annual rate of 9%, compounded…

A: Time value of money (TVM) refers to the method or technique which is used to measure the amount of…

Q: Use the Dupont identity to solve the following. The ABC Inc. has sales of $10,500, total assets of…

A: Solution: Dupont analysis is a measure to compute the firm’s Return in Equity (ROE). As per Dupont…

Q: Cambodian interest rate is 6% and the Vietnam interest rate is 7%. The spot exchange rate of one…

A: Covered interest arbitrage exist due to short term pricing in two different markets and short term…

Q: A project proposal requiring P840,000 initial investment will result to annual cash return as…

A: Here, To Find: Part A. Net Present Value (NPV) =? Discounted payback period =? Part B. Payback…

Q: What are the conditions for stock market efficiency? Is it possible that market for individual…

A: Stock prices completely reflect available information in an effective capital market: Rationality,…

Q: Calculate the future value of end-of-month payments of $500 made for 4 years into an investment fund…

A: Future Value of Ordinary Annuity refers to the concept which gives out the compounded or future…

Q: WACC. c) Total value of the fi rm

A: WACC stands for Weighted average cost of capital calculated by multiplying the cost of each…

Q: Kyle invested money in a mutual fund for ten years. The interest rate on the mutual fund was 3%…

A: Accumulated Value at the end of 10 years "FV" is $41,788.50 Interest rate for first 5 years is 3%…

Q: Roller Inc. has just paid an annual dividend of $0.8. Analysts expect dividends to grow by 8% per…

A: Data given: D0= $0.8 For next 9 years , g=Growth=8% per year Beyond 9 year g= Growth = 1.5% per…

Q: You have a large amount of money to invest for a short term of two years. You have done some market…

A: Let us calculate the amount available after 2 years under both the options:- Option 1: Invest money…

Q: Fitzgerald's 30-year bonds pay 7 percent interest annually on a $1,000 par value. If the bonds…

A: Here, To Find: Part a. Yield to maturity of annual bond =? Part b. Yield to maturity of semiannual…

Q: What is the firm value

A: EBIT = $20,000 every year in perpetuity Cost of equity (ke) = 15%Tax rate (t) = 40%Debt = NIL…

Concept explainers

Mortgages

A mortgage is a formal agreement in which a bank or other financial institution lends cash at interest in return for assuming the title to the debtor's property, on the condition that the obligation is paid in full.

Mortgage

The term "mortgage" is a type of loan that a borrower takes to maintain his house or any form of assets and he agrees to return the amount in a particular period of time to the lender usually in a series of regular equally monthly, quarterly, or half-yearly payments.

Question

Consider a loan of 1,000,000 which is to be amortized by 60 monthly payments. The interest
rate is 10% converted monthly. How much is the outstanding balance after the 46th payment?

Expert Solution

This question has been solved!

Explore an expertly crafted, step-by-step solution for a thorough understanding of key concepts.

SEE SOLUTION Check out a sample Q&A here

Given,

VIEW

Calculation of the outstanding balance is as follow:

VIEW

Answer

VIEW

Step by step

Solved in 3 steps

SEE SOLUTION Check out a sample Q&A here

Knowledge Booster

Learn more about

Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, finance and related others by exploring similar questions and additional content below.

Similar questions

Consider a loan of 1,000,000 which is to be amortized by 60 monthly payments. The interest rate is 10% converted monthly. How much of the 47th payment goes to pay the interest? How much of the 47th payment goes to pay the principal?
Consider a loan of 800,000 which is to be amortized by 60 monthly payments. The interest rate is 12% converted monthly. 1. How much is the outstanding balance after the 36th payment? 2. How much of the 37th payment goes to pay the interest the principal?
Consider a loan of 800,000 which is to be amortized by 60 monthly payments. The interest rate is 12% converted monthly. Find the monthly payment.
Consider a loan of 1,000,000 which is to be amortized by 60 monthly payments. The interest rate is 10% converted monthly. Construct the first 5 rows (t=0 to t=4) of the amortization schedule
A loan of $11,300 is to be amortized with quarterly payments over 6 years. If the interest on the loan is 16% per year, paid on the unpaid balance, answer the following questions. a. What is the interest rate charged each quarter on the unpaid balance? b. How many payments are made to repay the loan? c. What payment is required quarterly to amortize the loan? a. The interest rate each quarter is %. b. There will need to be payments made. c. The quarterly payment needs to be S (Round to the nearest cent as needed.)
Consider a $150,000 loan with an annual interest rate of 6.5 percent and a 30-year term. Discount points are equal to 2 percent. All other up-front financing costs to be paid by the borrower total $3,000. Compute the monthly payment and the loan balance at the end of months 1–6. What is the effective borrowing cost (EBC), assuming that the loan remains outstanding to maturity?
Suppose that one has a bank loan for P15,584.48, which is to be repaid in equal end-of-month installments for 9 years with a nominal interest rate of 0.114 compounded monthly. What is the amount of each payment?
Use the Amortization Table to determine the payment required to amortize a loan of $7500 at an annual interest rate of 12% with a term of 15 years. Payments are to be made monthly.What is the amount of each payment?
Suppose a borrower makes a $100,000 loan with annual payments at a 10 percent rate and a 10-year term. The loan is fully amortizing; however, payments are made on an annual basis to simplify the initial illustration. How the annual loan payment is calculated?
Consider an amortized loan of $41,000 at an interest rate of 7.9% for 8 years. What is the total interest owed? Round to the nearest dollar.
A loan is being repaid by 20 level annual payments of R, where R is three times the amount of interest that accrues during the first year. Find the interest rate of the loan expressed as an effective annual rate.
Suppose you take on a loan that is subject to an annual interest rate of 12%, with the interest rate being calculated at the end of each month. Two years later you pay back the loan in full by making a payment of $1,020. What was the original amount of the loan?