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QUESTION 1 - Present Value – 20 marks You have approached your organisation’s bank for a...

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Finance

QUESTION 1 - Present Value – 20 marks

You have approached your organisation’s bank for a $1,000,000loan. The bank has advised you that the organization can take atraditional mortgage for 10 years at a fixed rate of 6.5% withmonthly payments.

  1. What is the monthly payments?
  2. What is the APR of this loan?
  3. What is the effective interest rate (EAR) of this loan?
  4. How much of the first payment is interest?
  5. How much of the first payment is principal?
  6. Your organization plans to refinance the loan after five years.What will be the loan balance then?
  7. How much will the loan payment be if payments are scheduledquarterly rather than monthly?
  8. Based on quarterly payments, how much will your organisationowe on this loan after five years?

Answer & Explanation Solved by verified expert
4.0 Ratings (632 Votes)
Answer Monthly Payments After sactioning the loan amount a lump sum amount will be credited to account and a repayment will be in Equal Monthly Installments EMIs That means repayment of loan will start after moratorium period and repayment will be monthly    See Answer
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QUESTION 1 - Present Value – 20 marksYou have approached your organisation’s bank for a $1,000,000loan. The bank has advised you that the organization can take atraditional mortgage for 10 years at a fixed rate of 6.5% withmonthly payments.What is the monthly payments?What is the APR of this loan?What is the effective interest rate (EAR) of this loan?How much of the first payment is interest?How much of the first payment is principal?Your organization plans to refinance the loan after five years.What will be the loan balance then?How much will the loan payment be if payments are scheduledquarterly rather than monthly?Based on quarterly payments, how much will your organisationowe on this loan after five years?

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