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Grace [21]
3 years ago
10

You need a 30-year, fixed-rate mortgage to buy a new home for $210,000. Your mortgage bank will lend you the money at a 7.1 perc

ent APR for this 360-month loan. However, you can afford monthly payments of only $950, so you offer to pay off any remaining loan balance at the end of the loan in the form of a single balloon payment. How large will this balloon payment have to be for you to keep your monthly payments at $950
Business
1 answer:
miskamm [114]3 years ago
7 0

Answer:

$573,963

Explanation:

First, calculate the present value of the loan payments using the following formula

PVA = PMT x [ ( 1 + r )^n - 1 ] / [ r ( 1 + r )^n)

PVA = $950 x [ ( 1 + 7.1%/12 )^360 - 1] / [ 7.1%/12 ( 1 + 7.1%/12 )^360)

PVA =  $141,362.32  

Now calculate the difference of Value of loan and the present value of loan payment

Difference = Loan value - PV of loan payment = $210,000 - $141,362.32 = $68,637.68

This te Ballon payment in present value term, We need to determine the value at the end of the loan term.

Hence we need to calculate the future value of this payment as follow

Future value = Present vale x ( 1 + Monthly Interest rate )^numbers of months

Future value = $68,637.68 x ( 1 + 7.1%/12 )^360

Future value = $573,963.09

Future value = $573,963

Hence the ballon Payment will be $573,963

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Answer:

D they both will increase

Explanation:

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4 0
2 years ago
Universal Exports is expected to pay the following dividends over the next four years: $8, $4, $2, and $2. Afterwards the compan
omeli [17]

Answer:

$23.25

Explanation:

the maximum that you would be willing to pay for a stock of Universal today can be determined using the multistage dividend discount model

The first step is to find the present value of the dividends over the next four years :

Present value is the sum of discounted cash flows

Present value can be calculated using a financial calculator

Cash flow in year 1 = $8

Cash flow in year 2 = $4

Cash flow in year 3 = $2

Cash flow in year 4 = $2

I = 15%

Present value = $12.44

Next we would find the present value of the perpetual growth of dividend

($2 x 1.04 ) / 0.15 - 0.04 = 18.91

the present value of this amount = $18.91 / = $10.81

Maximum value = $12.44 + $10.81 = $23.25

To find the PV using a financial calculator:

1. Input the cash flow values by pressing the CF button. After inputting the value, press enter and the arrow facing a downward direction.

2. after inputting all the cash flows, press the NPV button, input the value for I, press enter and the arrow facing a downward direction.

3. Press compute

3 0
3 years ago
James, a production manager at a growing company, has mastered the processes and procedures of overall management of the ongoing
IgorLugansk [536]

Answer:

Vicarious learning

Explanation:

The learning that comes from the observation of the things are often refered to as vicarious or observational learning. The production manager here observes the processes and procedures involved in production and had learned these as well which is the obsevational learning of James.

3 0
3 years ago
Majka Company was started on January 1, Year 1. During Year 1, the company experienced the following three accounting events: (1
Norma-Jean [14]

Answer:

Majka Company

a) Accounting equation to record effects of each event:

1. Assets (Cash) increased $29,500 = Liabilities + Equity (Retained Earnings) increased $29,500.

2. Assets (Cash) decreased $13,500 = Liabilities + Equity (Retained Earnings) decreased $13,500.

3. Assets (Cash) decreased $1,800 = Liabilities + Equity (Retained Earnings) decreased $1,800.

b) Income Statement, Statement of Changes in Stockholders' Equity, and a Balance Sheet dated December 31, 2016:

1) Income Statement for the year ended December 31, 2016:

Sales                        $29,500

Expenses                ($13,500)

Net Income             $16,000

Dividend                   ($1,800)

Retained Earnings $14,200

2) Statement of Changes in Stockholders' Equity:

Retained Earnings b/f  $0

Net Income                  $16,000

Dividend                        ($1,800)

Retained Earnings      $14,200        

3. Balance Sheet as at December 31, 2016:

Assets:

Cash ($29,500 - 13,500 - 1,800) $14,200

Liabilities + Equity:

Equity: Retained Earnings           $14,200

c) Reason for different terminology to date income statement and balance sheet:

Income statement is prepared for an accounting period.  It covers a specified period, while a balance sheet is prepared as at an accounting date.  This means that one can prepare a balance sheet daily, or even after each transaction.  But, an income statement covers a period of time, say a month, a quarter, or six months, or a year, as the case may be.

Explanation:

Income Statement, Changes in Equity, and the Balance Sheet are important financial statements, which a business prepares to report its financial performance (results), the changes that occur in owners' equity, and the financial position respectively.

6 0
3 years ago
Because of his job, joseph knows how to operate machinery, design plans, and has knowledge of geography and math. he is also col
Orlov [11]

Answer:

He is likely a meter reader

4 0
2 years ago
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