miscellaneous application problems

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miscellaneous application problems

miscellaneous application problems

  1. A $200,000 house loan is amortized over 30 years at an interest rate of 10.4%.
  1. Find the monthly payment.
  2. Find the balance owed after 20 years.
  3. Find the balance of the loan after 100 payments.
  4. Find the monthly payment if the original loan were amortized over 15 years.
  1. Mr. Smith is planning to retire in 25 years and would like to have $250,000 then. What monthly payment made at the end of each month to an account that pays 6.5% compounded monthly will achieve his objective?
  2. You have a choice of either receiving $5,000 at the end of each year for the next 5 years or receiving $3000 per year for the next 10 years. If the current interest rate is 9% compounded annually, which is better?
  3. Find the fair market value of the ten-year $1,000 bond that pays $35 every six months, if the current interest rate has dropped to 6% compounded semi-annually.

Hint: You must do the following.

  1. Find the present value of $1000.
  2. Find the present value of the $35 payments.
  3. The fair market value of the bond=a+b