All categories

2 years ago

Greg and Joyce have an adjustable rate mortgage on their home. What is the key feature of this type of loan?

Business

1 answer:

vladimir1956 [14]2 years ago

6 0

Answer: Interest rate can vary

Explanation: Based on the description of Greg's and Joyce's mortgage loan, the key term is the adjustable nature of the loan used to finance the mortgage. Being adjustable simply means not fixated. Hence, the interest on the loan is bound to change throughout the entire period of the loan. This type of mortgage loans are called ADJUSTABLE RATE MORTGAGE or FLOATING mortgage. The change in the interest rate applied on the outstanding balance of is usually at intervals which could be annually, semianually or monthly basis as the case may be.

You might be interested in

A bond is issued at a discount when a bond's stated interest rate is ________. A. more than the effective interest rate B. equ

kiruha [24]

Answer: C. Less than Market Interest rate

Explanation: When the interest rate on a bonds issued by an organization is lesser than the prevailing interest rate being offered in the market at a certain time on Bank deposits, loans or other interest bearing funds, organization tends to issue discounts on bonds in scenarios like this and as such bonds are being issued or traded at prices lower or below it's face value in other to encourage investors and bridge the interest gap between the bond rate and the market rate.

8 0

2 years ago

Financial statement data for two years for Townson Company are as follows: Year 2 Year 1 Sales $3,645,000 $4,250,000 Fixed asset

Serga [27]

Answer:

C) Townson's fixed asset turnover ratio has decreased between Year 1 and Year 2.

Explanation:

Year 2 Year 1

Sales $3,645,000 $4,250,000

Fixed assets:

Beginning of year 880,000 820,000

End of year 520,000 880,000

fixed asset turnover (FAT) ratio = net sales / average fixed assets

FAT ratio year 1 = $4,250,000 / [($820,000 + $880,000) / 2] = 5

FAT ratio year 2 = $3,645,000 / [($880,000 + $520,000) / 2] = 5.2

Townson's fixed asset turnover ratio increased between year 1 and year 2.

6 0

3 years ago

In an example of __________ , many companies lobby the U.S. federal government through the U.S. Chamber of Commerce, an interorg

Iteru [2.4K]

Answer:

boundary spanning

Explanation:

Boundary spanning -

The term boundary spanning was given by Tushman in late 1950's .

It is the term used to describe an individual in the innovation system , whoes role is to link the internal work of the organization with the external work .

From the statement of the question , the example is for the term boundary spanning .

4 0

3 years ago

Two costs at Bradshaw Company appear below for specific months of operation. Month Amount Units Produced Delivery costs Septembe

arsen [322]

Answer:

(a) Delivery costs are mixed and utilities are variable.

Explanation:

Mixed costs are costs that are fixed and variable, for example, delivery costs are mixed because of the fixed cost of having the delivery equipment, like trucks and cars, and the variable is the amount of gas that you pay for it, then utilities are variable because the problem doesn´t specify that they are not.

8 0

3 years ago

Net Present Value and Competing Projects For discount factors use Exhibit 12B.1 and Exhibit 12B.2. Spiro Hospital is investigati

AleksandrR [38]

Answer:

1. Assuming a discount rate of 14%, compute the net present value of each piece of equipment.

Puro equipment: $255,203
Briggs equipment: $318,944

2. A third option has surfaced for equipment purchased from an out-of-state supplier. The cost is also $560,000, but this equipment will produce even cash flows over its 5-year life. What must the annual cash flow be for this equipment to be selected over the other two

$256,021

Explanation:

Year Puro Equipment Briggs Equipment

0 -$560,000 -$560,000

1 $320,000 $120,000

2 $280,000 $120,000

3 $240,000 $320,000

4 $160,000 $400,000

5 $120,000 $440,000

I used an excel spreadsheet to calculate the NPVs

the PV of the third equipment's annual cash flow should be higher than $878,944 (PV of Brigg's cash flows = $560,000 + $318,944)

now I used a annuity table: annuity factor for 5 years and 14% is 3.4331

cash flow x 3.4331 ≥ $878,944

cash flow ≥ $878,944 / 3.4331 = $256,021

Download pdf

5 0

3 years ago