Ask Question, Ask an Expert

+61-413 786 465

info@mywordsolution.com

Ask Microeconomics Expert

Economics


Home >> Microeconomics

A new office building was constructed

A new office building was constructed 5 years ago by a consulting engineering firm. At that time the firm obtained a bank loan for $100,000 with a 12% annual interest rate, compounded quarterly. The terms of the loan call for equal quarterly payments to repay the loan in 10 years. The loan also allows for its prepayment at any time without penalty.

As a result of internal changes in the firm, it is now proposed to refinance the loan through an insurance company. The new loan would be for a 20-year term with an interest rate of 8% per year, compounded quarterly. The new equal quarterly payments would repay the loan in the 20-year period the insurance company requires the payment of a 5% loan initiation charge (often described as a "5-point loan fee"), - which will be added to the new loan. .

(a) What is the balance due on the original mortgage if 20 payments have been made in the last five years?

(b) What is the difference between the equal quarterly payments on the present bank loan and the proposed insurance company loan?

Microeconomics, Economics

  • Category:- Microeconomics
  • Reference No.:- M91783029
  • Price:- $25

Priced at Now at $25, Verified Solution

Have any Question?


Related Questions in Microeconomics

Question a farm equipment manufacturer has already spent 3

Question: A farm equipment manufacturer has already spent $3 million in research and development to design a new model of tractor. To produce the tractors, the company will have to contract to rent a factory for a year a ...

Question answer all of the bulleted question related to the

Question: Answer all of the bulleted question related to the esay question on the the goverment budget. It's ok to use the outside source for the question, but please cite the source properly. ( write about one or two pa ...

Question recycling is a relatively inexpensive solution to

Question: Recycling is a relatively inexpensive solution to much of the environmental contamination from plastics, glass, and other waste materials. Is it a sound policy to make it mandatory for everybody to recycle? The ...

Question - suppose the demand curve for a product is given

Question - Suppose the demand curve for a product is given by Q = 11 - 2P + 3Ps Where P is the price of the product and Ps is the price of a substitute good. The price of the substitute good is $2.80. Suppose P = 1.20. W ...

Question in recent years labor costs in korea have been

Question: In recent years, labor costs in Korea have been rising about 10% faster than in the US. To what extent did this contribute to the devaluation of the won in 1997? If this trend continues, would you expect furthe ...

Question grade-school education is said to yield a

Question: Grade-school education is said to yield a beneficial externality because all of us benefit from interacting with people who know basic reading and writing. Assuming that this is true, make a case for providing ...

Question in principle the benefits of international trade

Question: In principle, the benefits of international trade to a country exceed the costs, no matter whether the country is importing or exporting. In practice, it is not always possible to compensate the losers in a cou ...

Question the banking sector was deregulated in 1982 before

Question: The banking sector was deregulated in 1982. Before then, the US economy had eight recessions in the post-WWII period, an average of one recession every 4½ years. Since then, there have been only two recessions ...

Question consider an economy with the representative

Question: Consider an economy with the representative consumer, representative firm, and government. Suppose that G = 12. The consumer's preferences over the consumption good and leisure are given by the utility function ...

Question in 1980 the inflation rate in italy was 21 and the

Question: In 1980, the inflation rate in Italy was 21% and the unemployment rate was 4.4%. By 1998, the inflation rate in Italy had declined to 2% and the unemployment rate had risen to 12.3%. (A) What were the principal ...

  • 4,153,160 Questions Asked
  • 13,132 Experts
  • 2,558,936 Questions Answered

Ask Experts for help!!

Looking for Assignment Help?

Start excelling in your Courses, Get help with Assignment

Write us your full requirement for evaluation and you will receive response within 20 minutes turnaround time.

Ask Now Help with Problems, Get a Best Answer

Why might a bank avoid the use of interest rate swaps even

Why might a bank avoid the use of interest rate swaps, even when the institution is exposed to significant interest rate

Describe the difference between zero coupon bonds and

Describe the difference between zero coupon bonds and coupon bonds. Under what conditions will a coupon bond sell at a p

Compute the present value of an annuity of 880 per year

Compute the present value of an annuity of $ 880 per year for 16 years, given a discount rate of 6 percent per annum. As

Compute the present value of an 1150 payment made in ten

Compute the present value of an $1,150 payment made in ten years when the discount rate is 12 percent. (Do not round int

Compute the present value of an annuity of 699 per year

Compute the present value of an annuity of $ 699 per year for 19 years, given a discount rate of 6 percent per annum. As

Follow Us

© Copyright 2013-14 mywordsolution.com All rights reserved