Watch the Mathematics of Finance video and then answer the question given below. Simple interest loans are generally used for which type of loan? Click here to watch the video. Choose the correct description of a simple interest loan. A. Home Mortgage loans OB. Short term loans of less than a year C. Car loans D. Long term loans of a year or more
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- With loans, spreadsheets make it easy to _____. (can be more than 1 of the options listed below) a. Calculate the amortization schedule b. Determine the number of remaining loan payments c. Find the loan balance due at any time d. Demonstrate the split between the principal and interest amounts.Suppose you are a regular employee in a finance company that offers a loan payable through salary deduction. One of its privileges is availing a loan that offers a 5% interest compounded annually for 1 to 5 years. You are thinking to apply for a loan but you wanted to analyze if you can shoulder the monthly payment. Make a loan schedule and fill up an application form that will help you decide the amount of loan that you will make Loan Schedule Loan Amount Maturity Value Monthly Payment t=1 t=2 t=3 t=4 t=5 P10,000 P20,000 P30,000 P40,000 P50,000 P100,000 P150,000 P200,000 P250,000A borrower has two alternatives for a loan: (1) issue a $360,000, 75-day, 6% note or (2) issue a $360,000, 75-day note that the creditor discounts at 6%. Assume a 360-day year. This information has been collected in the Microsoft Excel Online file. Open the spreadsheet, perform the required analysis, and input your answers in the questions below. Calculate the amount of the interest expense for each option. Round your answer to the nearest dollar. $ ________________________ Determine the proceeds received by the borrower in each alternative. Round your answers to the nearest dollar. (1) $360,000, 75-day, 6% interest-bearing note: $___________________________ (2) $360,000, 75-day note discounted at 6%: $ _________________________
- Select the correct choice that completes the sentence below. The rebate amount is equal to the rebate fraction O A. multiplied by the total finance charge O B. multiplied by the number of months of a loan OC. divided by the number of weeks of the loan O D. divided by the total interestBuy On Time or Pay Cash Cost of Borrowing 1. 2. 3. 4. 5. 6. 7. 8. Cost of Paying Cash 9. 10. Terms of the loan a. Amount of the loan b. Length of the loan (in years) c. Monthly payment Total loan payments made ($ per month Less: Principal amount of the loan Total interest paid over life of loan Tax considerations: - Is this a home equity loan? - Do you itemize deductions on your federal tax return? What federal tax bracket are you in? Taxes saved due to interest deductions ($ %) Total after-tax interest cost on the loan X months) Annual interest earned on savings (6% X Annual after-tax interest earnings ($ %) X $10,000.00 5 $188.70 no yes 35% $ $ $ 00 00 $A borrower has two alternatives for a loan: (1) issue a $630,000, 75-day, 6% note or (2) issue a $630,000, 75-day note that the creditor discounts at 6%. Assume a 360-day year. This information has been collected in the Microsoft Excel Online file. Open the spreadsheet, perform the required analysis, and input your answers in the questions below. X Open spreadsheet a. Compute the amount of the interest expense for each option. Round your answer to the nearest dollar. for each alternative. b. Determine the proceeds received by the borrower in each situation. Round your answers to the nearest dollar. < (1) $630,000, 75-day, 6% interest-bearing note: $ (2) $630,000, 75-day note discounted at 6%: $ c. Alternative is more favorable to the borrower because the borrower
- After examining the various personal loan rates available to you, you find that you can borrow funds from a finance company at 8 percent compounded or from a bank at 9 percent compounded . Which alternative is more attractive?A borrower has two alternatives for a loan: (1) issue a $420,000, 30-day, 6% note or (2) issue a $420,000, 30-day note that the creditor discounts at 6%. Assume a 360-day year. This information has been collected in the Microsoft Excel Online file. Open the spreadsheet, perform the required analysis, and input your answers in the questions below. Calculate the amount of the interest expense for each option. Round your answer to the nearest dollar. $ fill in the blank 2 for each alternative. Determine the proceeds received by the borrower in each alternative. Round your answers to the nearest dollar. (1) $420,000, 30-day, 6% interest-bearing note: $ fill in the blank 3 (2) $420,000, 30-day note discounted at 6%: $ fill in the blank 4 Alternative 1 is more favorable to the borrower because the borrower receives more cash .Rank the following car loan descriptions from highest payment ot lowest payment. The loan amount is the same for all. 5-year loan 3% interest rate 5-year loan 4% interest rate 6-year loan 3% interest rate 6-year loan 4% interest rate
- Write an appropriate word in the blank so that the resulting statement is true. A monthly mortgage payment is used to repay the principal plus interest. In addition, lending institutions can require monthly deposits into an account, an account used by the lender to pay real estate taxes and insurance.We will now verify your results using an online Amortization Calculator. Return to www.bankrate.com (Links to an external site.), scroll down the home page and select Amortization Calculator (Links to an external site.) under the Mortgages heading. Enter the amount, time, and rate for the original loan to begin with and click CALCULATE. Your monthly payments will appear on the side. Click Show Amortization Schedule to see the month-to-month breakdown of your loan payments over the entire term of the loan.1) Use the Loan worksheet to complete the loan amortization table. In cell F2, insert the IPMT function to calculate the interest for the first payment. Copy the function to the range F3:F25. (The results will update after you complete the other functions and formulas.) 2) In cell G2, insert the PPMT function to calculate the principal paid for the first payment. Copy the function to the range G3:G25. 3) In cell H2, insert a formula to calculate the ending principal balance. Copy the formula to the range H3:H25. 4) Now you want to determine how much interest was paid during the first two years. In cell B10, insert the CUMIPMT function to calculate the cumulative interest after the first two years. Make sure the result is positive. 5) In cell B11, insert the CUMPRINC function to calculate the cumulative principal paid at the end of the first two years. Make sure the result is positive. 6) You want to perform a what-if analysis to determine the rate if the monthly payment is…