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Phantasy [73]
3 years ago
5

You are considering to buy a $250,000 property with a 80% LTV ratio and have two mortgage choices: a FRM or a FRM with an IO per

iod. The lender offers the following two loans: Loan 1: 30 year FRM, fully amortizing monthly payments; 4% interest Loan 2: 30 year FRM with 4 year IO period, fully amortizing monthly payments; 4.15% interest Check all the true statements: If I want to save on interest payments, I would choose Loan 2 If I want to minimize the payments in the first few years, I would choose Loan 2 If I'd like to pay off the loan sooner, I'd choose Loan 1 If I want my payments to remain the same for the duration of the loan, I would pick Loan 1
Business
1 answer:
scoray [572]3 years ago
5 0

Answer:

Statement # 1: False

Statement # 2: True

Statement # 3: False

Statement # 4: True

Explanation:

Lets look at each statement provided in the question and determine which of them is true or false.

Statement # 1 is false. First things first, the interest on this loan amount is higher which is at 4.15%. This is compared to the interest of 4% applicable on loan option 1. Secondly, there is a four year interest only option. This means that for 4 years there will be no repayments of the principal amount which means that the interest of 4.15% will continue to apply on the entire loan amount for these 4 years. In loan 1 however, principal repayments will reduce the principal amount after the 1st year which would further reduce the interest payment in the second year.

Statement # 2 is true. Loan 2 has an interest only period for the first 4 years. During this year you will only pay the 4.15% interest whereas in loan option 1, you will pay 4% interest AND the principal amount. The effect would offset once principal payments start in loan 2 but it would still mean that payments would be minimized in the first few years.

Statement # 3 is false. One of the advantages of having a loan with an interest free clause is that you can pay it off faster than a conventional loan. Since both the loans are fully amortizing, the principal payments would be different but would both result in the principal being repaid in the full 30 year tenor. Any extra payment that you wish to make would be counted towards principal payment in each loan option. However, for loan 1, the total monthly payments you make would remain the same. For loan 2, the extra payments that you make will continue to lower the monthly payments in way of interest which would allow you to save up more to pay more off in principal. The interest only period will also allow you to arrange extra funds during the IO period and repay the principal further. With loan 1, you will continue to make the same monthly payment until the end.

Statement # 4 is true. A fixed payment is being made each year by way of interest and principal repayments and will remain the same till the loan is fully amortized at maturity. In loan 2 on the other hand, a larger balloon payment will start 4 years later since only interest is paid in the first 4 years. So basically you may lower in the first 4 years and more in the remaining years.

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Paha777 [63]

For a 13-person team, The number of extra workers that should be hired to meet the labor hours needed without overtime is 7.

<h3>What is Labor hours?</h3>

This is a term that connote the total hours of workers that are said to be having or getting an hourly wage and they are the ones who are said to be directly employed on the site of a building, public works project, etc.

Note that "Labor hours" is one that entails hours of work that has been carried out  by workers who have been employed by the general contractor or the subcontractors  that are found to be working on the project.

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8 0
2 years ago
Most audience members expect your presentation to include
Elan Coil [88]

Answer: Preview-view-review strategy.

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3 years ago
Christine saw a television advertisement asking for donations of used vehicles to a charitable foundation and decided to donate
stealth61 [152]

Answer:

Option C She can claim an estimated value for the auto if the charity uses it rather than selling it

Explanation:

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5 0
3 years ago
In 20X5, Elm Corp. bought 10,000 shares of Oil Corp. at a cost of $20,000. On January 15, 20X6, Elm declared a property dividend
xxMikexx [17]

Answer:

c) $25,000

Explanation:

A property dividend should be recorded in retained earnings at the property's  <u>market value at date of declaration.</u>

<u>The date of declaration is the date on which the firm has made the commitment to pay the dividend. The market value on this date is the value that was considered when the board made the decision to distribute a property dividend and thus is the appropriate measure of the sacrifice to the firm. </u>

<u> </u>In application to the scenario, <u>the property dividend will be recorded in retained earnings at the market value at the date of declaration which is Jan 15 </u>NOT on the day it is payable.

Hence, retained earnings will reduce by $25,000

In 20X5, Elm Corp. bought 10,000 shares of Oil Corp. at a cost of $20,000. On January 15, 20X6, Elm declared a property dividend of the Oil stock to shareholders of record on February 1, 20X6, payable on February 15, 20X6. During 20X6, the Oil stock had the following market values:  

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February 15

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6 0
3 years ago
An employee has a claim on the cash flows of Martin’s Machines. This claim is defined as a claim by one of the firm's:
noname [10]

Answer:

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The stakeholders are the people and group that has an interest in the company and it directly gains or suffered from the actions that are taken by the company

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Here in the given situation, the employee has a claim on the cash flows so this represents the stakeholder

5 0
3 years ago
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