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sammy [17]
3 years ago
5

You have just arranged for a $1,800,000 mortgage to finance the purchase of a large tract of land. The mortgage has an APR of 7.

8 percent, and it calls for monthly payments over the next 30 years. However, the loan has an eight-year balloon payment, meaning that the loan must be paid off then. How big will the balloon payment be? How do I solve on a Financial Calculator ?
Business
2 answers:
scZoUnD [109]3 years ago
6 0

Answer:

$556063.77 is the balloon payment in order to finish the loan in 8 years.

Explanation:

Firstly we will use the Present value formula annuity to find how much will we pay on a monthly basis for the 30 year mortgage loan so we are given :

Pv the present value of the mortgage is $1800000

i which is the interest rate 7.8%/12 as there will be monthly payments

is the number of payments which are 30 x 12 = 360 payments

then we substitute on the formula Pv= C[(1-(1+i)^-n) /i]

we are looking for C the monthly payments

$1800000= C[(1-(1+(7.8%/12))^-360)/(7.8%/12)] now divide by the coefficient of C both sides to solve for C

$1800000/[(1-(1+(7.8%/12))^-360)/(7.8%/12)] = C

$12957.66= C

now if the monthly payment is $12957.66 we will find how much we will pay in 8 years which will be $12957.66 x 12 x 8 = $1 243 936.23 now if this amount is covered for 8 years then the balloon payment is $1800000 - $1243936.23 = $ 556063.77 which is the remaining amount in present value terms, this is the balloon payment to finish the mortgage in 8 years.

iVinArrow [24]3 years ago
6 0

PLEASE FIND THE ANSWER IN THE ATTACHMENT

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6 0
3 years ago
Acme Home Lending offers home equity loans up to 80% of the home value for its customers. If Sally Johnson has a home valued at
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Answer:

She can borrow $110,000 in a home equity loan from Acme

Explanation:

Home equity loan is available to the 80% of the Home value. sally has already a mortgage of $50,000 so she can only borrow the differential amount of Allowable loan and existing loan.

As per given data

Home value = $200,000

Allowable Loan limit = $200,000 x 80% = $160,000

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7 0
2 years ago
Banc Corp. Trust is considering either a bankwide overhead rate or department overhead rates to allocate $396,000 of indirect co
Viktor [21]

Answer:

(A) $144,000.

Explanation:

For computing the indirect costs allocated to the Commercial Department first we have to compute the per unit cost which is shown below:

Per unit cost = (Allocated department overhead indirect cost) ÷ (total number of direct labor hours)

=  $396,000 ÷ 22,000

= $18

The total number of direct labor hours = Consumer + commercial

                                                                = 14,000 + 8,000

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Now the indirect cost equal to

= Per unit cost × Commercial direct labor hours

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"which expenses would most likely be classified as prepaid expenses (asset) rather than accrued expenses (liability)?"
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8 0
3 years ago
Read 2 more answers
3. Definition of economic costs Felix lives in Miami and runs a business that sells boats. In an average year, he receives $851,
Elanso [62]

Answer:

The economic costs are the sum of the explicit costs or monetary costs, and the implicit costs, or opportunity costs.

The explicit or monetary costs that Felix has are:

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Total monetary costs: $751,000

The implicit or opportunity costs that Felix is incurring are:

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Total opportunity costs: $105,000

Total economic costs: $751,000 + $105,000 = $856,000

6 0
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