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- Ashraf wants to buy a car for which he has been saving and investing in a bank an amount of OMR. 1000 each year for 10 years. He is willing to withdraw and buy a new car today. What amount will he receive assuming an interest rate of Option a : 7% Option b: 9%? Select one: O a. Option a: 5499.70 Option b: 6983.05 O b. Option a: 7023.58 Option b: 6417.65 O c. Option a: 4087.29 Option b: 6235.20 O d. Option a: 6487.80 Option b: 6157.08 Previous nAbdul wants to deposit OMR 1500 in a bank and he wants to know in how many years this amount will double; if he deposits with: Option a: Bank Muscat at 8% interest rate Option b: Bank Dhofar at 8.5% interest rate. Select one: a. Option a: 9 Option b: 8.4 b. Option a: 900 Option b: 847.05 c Option a: 100 Option b: 800 d. Option a: 800 Option b: 900John wants to buy a property for $121,250 and wants an 80 percent loan for $97,000. A lender indicates that a fully amortizing loan can be obtained for 30 years (360 months) at 9 percent interest; however, a loan fee of $4,800 will also be necessary for John to obtain the loan. Required: a. How much will the lender actually disburse? b. What is the APR for the borrower, assuming that the mortgage is paid off after 30 years (full term)? c. If John pays off the loan after five years, what is the effective interest rate? d. Assume the lender also imposes a prepayment penalty of 2 percent of the outstanding loan balance if the loan is repaid within eight years of closing. If John repays the loan after five years with the prepayment penalty, what is the effective interest rate
- Hanie Najwa needs to borrow RM5,000 for one year. • Option A: She is offered a loan at an effective annual rate of 5% • Option B: She is offered a loan of RM10,000 at a lower effective annual rate of interest denoted by i. If she borrows of RM10,000, she can invest the excess RM5,000 for one year at 3%. How low must the rate on the RM10,000 loan (Option B) be in order for Hanie Najwa to prefer it to the RM5,000 loan (Option A)?You are required to two choose from two actions: A1: deposit K1 000 000 in the bank for 1 year at 7 % interest A2: invest K 1 000 000 for 1 year with 50% probability of having K2 500 000 at the end of the year, and 50% probability of losing all the K 1 000 000. Which would you choose and why?Q2. You plan to purchase a house for $195,000 using a 30-year mortgage obtained from your local bank. You will make a down payment of 20% of the purchase price and monthly payment. You will not pay off the mortgage early. Your bank offers you the following three options the payment: Option 1: Mortgage rate of 5.5% and zero points. Option 2: Mortgage rate of 5.35% and 1 point Option 3: Mortgage rate of 5.35 % and 1.5 points
- Suppose Frank buys a car for € 20,000 by borrowing this amount from a financial intermediary. He is to pay the loan back with monthly payments for the next five years, and the annual interest rate is 6%. Which of the following formulas determines Frank's monthly payment? Loan Amount x (0.06 / [1/ (1 + 0.06)]') Loan Amount x (0.005 / {1 - [1/ (1 + 0.005)j6° }) Loan Amount x (6 / {1 - [1/ (1 + 6)]'}) Frank's monthly payment is equal to If Frank decides to repay the loan in six years instead of five years, his monthly payment would O O10. Tony is offering Phil two repayment plans for a long overdue loan. Offer 1 is a visit from an enforce and the debt is due in full at once. Offer 2 is to pay back $4,000 at the end of each year at 15% interest rate until the loan principal is paid off. Phil owes Tony $20,000. How long will it take for Phil to pay off the loan if he takes Offer 2? A) 201A = Po(1+r)th 9.92 years 7.27 years 5.52 years 6.64 years n = ln ( 4 ) In/190 201 AV In (1.15) 11.515A man plans to take a vacation in 4 years. He wants to buy a certificate of deposit for $1200 that he will cash in for the trip. What is the minimum annual interest rate he must obtain on the certificate if he needs at least $1700 for the trip? Assume that the interest on the loan is computed using simple interest The rate he must obtain is ___%
- magine you borrow $500 from your roommate, agreeing to pay her back $500 plus 12 percent nominal interest in one year. Assume inflation over the life of the contract is expected to be 5.94 percent. What is the total dollar amount you will have to pay her back in a year? What approximate percentage of the interest payment is the result of the real rate of interest? Use the simplified Fisher equation. (Do not round intermediate calculations. Round answers to 2 decimal places, e.g. 17.54.)Excel Template(Note: This template includes the problem statement as it appears in your textbook. The problem assigned to you here may have different values. When using this template, copy the problem statement from this screen for easy reference to the values you’ve been given here, and be sure to update any values that may have been pre-entered in the template based on the textbook version of the problem.) Total dollar amount $enter a dollar amount rounded to 2 decimal places Approximate…Razak has some property for sale and has received two offers. The first offer is for RM89,500 today in cash. The second offer is the payment of RM35,000 today and an additional guaranteed RM70,000 two years from today. If the applicable discount rate is 11.5 percent, which offer should he accept and why? (assuming no cost involved) Select one: A. Kumar should accept the second offer today because it has the lower future value B. Kumar should accept the first offer today because it has the higher present value C. Kumar should accept the second offer because it has the higher present value D. Kumar should accept the first offer as it is a lump sum paymentA friend asks to borrow $50 from you and in return will pay you $53 in one year. If your bank is offering a 6.2% interest rate on deposits and loans: a. How much would you have in one year if you deposited the $50 instead? b. How much money could you borrow today if you pay the bank $53 in one year? c. Should you loan the money to your friend or deposit it in the bank? a. How much would you have in one year if you deposited the $50 instead? If you deposit the money in the bank today you will have $ in one year. (Round to the nearest cent.) b. How much money could you borrow today if you pay the bank $53 in one year? You will be able to borrow S today. (Round to the nearest cent.) c. Should you loan the money to your friend or deposit it in the bank? (Select from the drop-down menu) From a financial perspective, you should as it will result in more money for you at the end of the year.