Purchase Solution

Finance: Loan amortization.

Not what you're looking for?

Ask Custom Question

4-5: PRICE/EARNING RATIO A company has an EPS of $2.00, a cash flow per share of $3.00, and a price/cash flow ratio of 8.0x. What is its P/E ratio?

4-8: BASIC EARNING POWER Duval manufacturing recently reported the following information:

Net income $600,000
ROA $ 8%
Interest expense $225,000
Duval's tax rate is 35%. What is its basic earning power (BEP)?

5-6: FUTURE VALUE: ANNUITY VERSUS ANNUITY DUE what's the future value of a 7%, 5-year ordinary annuity that pays $300 each year? If this was an annuity due, what would its future value be?

5-21: EVALUATING LUMP SUMS AND ANNUITIES Crissie just won the lottery, and she must choose between three award options. She can elect to receive a lump sum today of $61 million, to receive 10 end-of-year payments of $9.5 million, or to receive 30 end-of-year payments of $5.5 million.

5-35: AMORTIZATION SCHEDULE WITH A BALLOON PAYMENT you want to buy a house that cost $100,000. You have $10,000 for a down payment, but your credit is such that mortgage companies will not lend you the required $90,000. However, the realtor persuades the seller to take a $90,000 mortgage (called a seller take-back mortgage) at a rate of 7%, provided the loan is paid off in full in 3 years. You expect to inherit $100,000 in 3 years; but right now all you have is $10,000, and you can afford to make payments of no more than $7,500 per year given your salary. (The loan would call for monthly payments, but assume end-of-year annual payments to simplify things.)

a. If the loan was amortized over 3 years, how large would each annual payment be? Could you afford those payments?
b. If the loan was amortized over 30 years, what would each payment be? Could you afford those payments?
c. To satisfy the seller, the 30-year mortgage loan would be written as a balloon note, which means that at the end of the third year, you would have to make the regular payment plus the remaining balance on the loan. What would the loan balance be at the end of Year 3, and what would the balloon payment be?

Attachments
Purchase this Solution
Solution Summary

The problems deal with issues under finance: loan amortization, future value etc.

Solution provided by:
Chidi Ngene, M. Sc.
Education
  • B. Sc., University of Nigeria
  • M. Sc., London South Bank University
Recent Feedback
  • "Thank you."
  • "thank you Chidi Ngene.. if you have any APA references would be great"
  • "Thank you so much for your help, your explanations were easy to understand and apply!"
  • "are you able to highlight the equations used either on the xlsx or a word doc as to how each graph was formed- overall looks fine i just need help understanding this myself"
  • "Chidi Ngene, M. Sc. Was extremely helpful as without the help and guidance I would have failed, but with the help I passed. I still have a lot to learn and in need of the guidance to understand and learn more on the subject. I would recommend Chidi Ngene and BrainMass to anyone that are in need of help. Thank you!!"
Purchase this Solution
Free BrainMass Quizzes
Introduction to Finance

This quiz test introductory finance topics.

Paradigms and Frameworks of Management Research

This quiz evaluates your understanding of the paradigm-based and epistimological frameworks of research. It is intended for advanced students.

Transformational Leadership

This quiz covers the topic of transformational leadership. Specifically, this quiz covers the theories proposed by James MacGregor Burns and Bernard Bass. Students familiar with transformational leadership should easily be able to answer the questions detailed below.

Team Development Strategies

This quiz will assess your knowledge of team-building processes, learning styles, and leadership methods. Team development is essential to creating and maintaining high performing teams.

Lean your Process

This quiz will help you understand the basic concepts of Lean.

View More Free Quizzes
Related BrainMass Solutions

  • Managerial Finance Gittman

    152893 P4-43 Managerial Finance Gittman P4-43 Loan amortization schedule Joan Messineo borrowed $15,000 at a 14% annual rate of interest to be repaid over 3 years. The loan is amortized into three equal, annual, end-of-year payments. a.

  • Difference between lease payment and bank loan payment

    I created a loan amortization schedule in excel for you and then compared the loan payment to the lease payment.

  • Amortizing Loan and Bonds

    82360 Finance (See attached file for full problem description) --- 37. Amortizing Loan. Consider a 4-year amortizing loan. You borrow $1,000 initially, and repay it in four equal annual year-end payments.

  • Economic Concepts - Expected Value, Amortization, Cash Flows

    Amortization is chiefly used in loan repayments (a common example being a mortgage) and in sinking funds. Payments are divided into equal amounts for the duration of the loan, making it the simplest repayment model.

  • Finance : Mortgages and Amortization

    237643 Finance : Mortgages and Amortization Here is the problem Delta , LLC, currently net leases its headquarters office building for $70,000 per month, and this lease has two years left to run.

  • Construct an amortization schedule showing interest and principal payments for each month of the thirty year term.

    54588 Real Estate Finance You have contracted to purchase a $10,000,000 multi-family property with $2,000,000 cash down payment as equity and an $8,000,000 mortgage loan.

  • Managerial Finance

    18473 Managerial Finance Mortgages Discussion Question 2: When a person gets a mortgage on their home, they usually also get an amortization schedule showing (for a 30 year mortgage) each of 360 payments listed with the amount of principle being paid

  • Amortization Schedule

    169483 Amortization Schedule: Purchasing an Asset P3-32. You are planning to purchase a building for $40,000, and you have $10,000 to apply as a down payment.

  • Finance : Depreciation and Amortization

    For doing this, you will qualify for a 3-year loan with an interest rate of 6% on the remaining $10000 balance. The purpose of this problem is to make an amortization schedule for this 3-year loan.

View More Related Solutions