You need a 30-year, fixed-rate mortgage to buy a new home for $240,000. Your mortgage bank will lend you the money at a 7.5 percent

You want to borrow $47,170 from your local bank to buy a new sailboat. You can afford to make monthly payments of $1,160, but no more. Assume monthly compounding. What is the highest rate you can afford on a 48-month APR loan?    A.  8.38 percent B.  8.67 percent C.  8.82 percent D.  9.01 percent E.  9.18 percent

119.

You need a 30-year, fixed-rate mortgage to buy a new home for $240,000. Your mortgage bank will lend you the money at a 7.5 percent APR for this 360-month loan, with interest compounded monthly. However, you can only afford monthly payments of $850, so you offer to pay off any remaining loan balance at the end of the loan in the form of a single balloon payment. What will be the amount of the balloon payment if you are to keep your monthly payments at $850?    A.  $1,112,464 B.  $1,113,316 C.  $1,114,480 D.  $1,115,840 E.  $1,116,315   Remaining principal = $240,000 - $121,564.98 = $118,435.02 Balloon payment = $118,435.02 × [1 + (0.075/12)]30 × 12 = $1,115,840

120.

The present value of the following cash flow stream is $5,933.86 when discounted at 11 percent annually. What is the value of the missing cash flow?        A.  $1,500 B.  $1,750 C.  $2,000 D.  $2,250 E.  $2,500 PV of missing cash flow = $5,933.86 - ($2,000/1.11) - ($1,750/1.113) - ($1,250/1.114) = $2,029.06 CF2 = $2,029.06 × 1.112 = $2,500