1,Chapter 165 Case S & S's AIR MORTGAGE PROBLEM.

1. What are the montly payments for a 3-year traditional mortgage?What are the payments for a 20 -year traditional mortgage.

2.prepare an amortization table for the first six months of the traditional 30 year mortgage..how much of the first payment goes toward principal?

3.How long would it take for S&S Air to pay off the smart loan assuming 30-year traditional mortgage payments?Why is this shorter than the time needed to pay off the traditional mortgage? How much interest would the company save?

4.Assume S&S Air takes out a bullet loan under the terms described. what are the payments on the loan?

5.What are the payments on the loan?

6.Which mortgage is the best for the company? are there any potential risks in this action?

Amortization with Equal Payments: Prepare an amortization schedule for a three-year loan of $75,000. The interest rate is 8 percent per year,and the loan calls for equal annual payments.How much interest is paid in the third year? How much total interest is paid over the life of the loan.

56.Amortization with Equal Principal Payments. Rework Problem 55 assuming that the loan agreement calls for a principal reduction of $25,000 every year instead of equal annual payments.

30.Calculating Annuities Due. You want to buy a new sports car from Muscle Motors for $52,500.The contract is in the form of a 60-month annuity due at a 6.25 percent APR.What will your monthly payment be?

21.Calculating Number of Periods.One of your customers is delinquent on his accounts payable balance. You've mutually agreed to a repayment scheduled of $500 per month.You will charge 1.4 percent per month interest on the over due balance. If the current Balance is $17,340, how long will it take for the account to be paid?

20. Calculating Loan Payments. You want to buy a new sports coupe for $68500, and the finance office at the dealership has quoted you a loan with an APR 5.9 for 60 months to buy the car.What will your monthly payments be? What is the effective annual rate on this loan?

9.Calculating Annuity Values.If you deposit $5,000 at the end of each of the next 20 years into an account paying 10.8 percent interest,how much money will you have in the account in 20 years? How much will you have if you make deposits for 40 years?

10. Calculating Perpetuity Values. Curly's Life Insurance Co.is trying to sell you an investment policy that will pay you and your heirs $25,000 per year forever.If the required return on this investment is 6 percent,how much will you pay for the policy?