Question
To start a new business, Jane intends to borrow $23,700 from a local bank. If the bank asks her to repay the loan in 4equal
To start a new business, Jane intends to borrow $23,700 from a local bank. If the bank asks her to repay the loan in 4equal annual instalments of $7,639.13.
Determine the banks effective annual interest rate on the loan transaction. With annual compounding, what nominal rate would the bank quote for this loan?
A lakefront house in Kingston, Ontario, is for sale with an asking price of $478,200. The real estate market has been quite active, so the house will almost certainly attract several offers, and may sell for more than the asking price. Charlie is very eager to purchase this house, but is concerned that he may not be able to afford it. He has $142,700 available for a down payment, and can pay up to $1,940 per month on a mortgage loan. As Charlie is a long-time customer, his bank has offered him a great mortgage rate of 3.7 percent on a one-year term. If the loan will be amortized over 21 years. What is the most that Charlie can afford to pay for the house?
After living in a university residence for one year, Alysha decides to rent an apartment for the remaining three years of her degree. She has found a nice location that will cost $545 per month. Rent for the first and last month must be paid up front. How much money would Alysha need to have in her bank account right now to be sure she will always have enough for rent? The bank account pays 6.9 percent interest, compounded monthly.
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