Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

Explain the difference between positive and negative cash flow. If you borrow $20,000 from a bank, is that a positive or negative cash flow? Justify

image text in transcribed
Explain the difference between positive and negative cash flow. If you borrow $20,000 from a bank, is that a positive or negative cash flow? Justify your answer. What is the formula to calculate how much a savings account would be worth if the initial balance is $1000 with monthly deposits of $75 for 10 years at 4.3 percent annual interest compounded monthly? What is the formula result? You want a savings account to grow from $1,000 to $5,000 within two years. Assume the bank provides a 3.2 percent annual interest rate compounded monthly. What is the formula to calculate how much you must deposit each month to meet your savings goal? What is the formula result? You want to take out a loan for $250,000 at 4.8 percent interest compounded monthly. If you can afford to make monthly payments of only $1, 500 on the loan, what is the formula to calculate the number of months required to repay the loan completely? What is the formula result? 5. Rerun your calculations from Question 4 assuming that you can afford only a $1,000 monthly payment. What are the revised formula and resulting value? How do you explain the result? You take out a 10-year loan for $250,000 at 5.3 percent interest compounded monthly. What is the formula to calculate the monthly payment and the resulting value? For the loan conditions specified in Question 6, provide formulas to calculate the amount of the first payment used for the interest and the amount of the first payment used to repay the principal. What are the resulting values? For the loan conditions specified in Question 6, what are the formulas to calculate how much interest you will pay in the first year and how much you will repay toward the principal? What are the resulting values? For the loan conditions in Question 6, calculate the total cost of the loan in terms of the total interest paid through the 10 years of the loan

Step by Step Solution

There are 3 Steps involved in it

Step: 1

blur-text-image

Get Instant Access to Expert-Tailored Solutions

See step-by-step solutions with expert insights and AI powered tools for academic success

Step: 2

blur-text-image_2

Step: 3

blur-text-image_3

Ace Your Homework with AI

Get the answers you need in no time with our AI-driven, step-by-step assistance

Get Started

Recommended Textbook for

Auditing Markets Products And Marketing

Authors: David Parmerlee

1st Edition

0658001337, 978-0658001338

More Books

Students also viewed these Accounting questions

Question

What has been the effectiveness of Head Start?

Answered: 1 week ago

Question

2. Define communication.

Answered: 1 week ago