MA373 F15 Homework Chapter 5 Solutions

MA373 F15 Homework Chapter 5 Solutions - Math 373 Fall 2013...

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October 8, 2015 Copyright 2013, 2014, 2015 Math 373 Fall 2013 Homework Chapter 5 Chapter 5 Section 2 1. Zhu borrows 100,000 to be repaid with five annual payments. The annual effective interest rate on the loan is 6%. Complete an amortization table for this loan. Solution: First we need to find the appropriate payments using our calculator: 5 / 6 100,000 23,739.64 N I Y PV CPT PMT   Now we can create the Amortization table. Time Payment Interest in Pmt Principal in Payment OLB 0 100,000.00 1 23,739.64 6,000.00 17,739.64 82,260.36 2 23,739.64 4,935.62 18,804.02 63,456.34 3 23,739.64 3,807.38 19,932.26 43,524.08 4 23,739.64 2,611.44 21,128.20 22,395.89 5 23,739.64 1,343.75 22,395.89 0.00
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October 8, 2015 Copyright 2013, 2014, 2015 2. Yi has a loan of 15,000 which is being repaid with ten level annual payments of 2000. a. Calculate the amount that Yi will pay in principal over the life of the loan. Solution: Total Amount of Principal=Total Loan Amount= 15,000 b. Calculate the amount of interest that Yi will pay. Solution: Interest Paid=Total Amount Paid-Total Loan Amount 10*2000 15,000 5,000
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October 8, 2015 Copyright 2013, 2014, 2015 3. Jake has repaid a loan with 4 annual payments of 950 each. The total interest repaid in those four payments was 800. Calculate the annual effective interest rate on the loan. Solution: Total Amount Paid=Total Amount of Interest Paid+Total Loan Amount Total Loan Amount 950*4 800 3000 Now we can find the interest rate using our financial calculator. 3000 4 950 / 10.175 PV N PMT CPT I Y   4. Mark borrowed money to buy a new car. Payments are made monthly. The loan has an nominal rate of interest of 12% compounded monthly. Immediately after the 15 th payment, Mark has an outstanding loan balance of 8500. Calculate the amount of interest in his 16 th payment. Solution: Amount of interest in the 16 th payment= (12) 15 85000*0.01 85 12 i OLB 5. Nik took a loan to buy a new couch for his apartment. He is making monthly payments and the loan has a nominal interest rate of 9% compounded monthly. Immediately after the 8 th payment, Nik still owes 800 on his loan. The principal in his 9 th payment is 90. Determine the amount of the 9 th payment. Solution: (12) 0.0075 12 i 8 800 OLB Princ 9 =90 Payment9=(Principal in Payment 9)+(Interest in Payment 9)= 90 800(0.0075) 96
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October 8, 2015 Copyright 2013, 2014, 2015 6. Chris has a mortgage that is being repaid with monthly payments. The annual effective interest rate on his loan is 8%.
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