Q: Consider again the setting of Problem 19. Now that you realize
Consider again the setting of Problem 19. Now that you realize your best investment is to prepay your student loan, you decide to prepay as much as you can each month. Looking at your budget, you can...
See AnswerQ: If you decide to take the mortgage in Problem 11, Oppenheimer
If you decide to take the mortgage in Problem 11, Oppenheimer Bank will offer you the following deal: Instead of making the monthly payment you computed in that problem every month, you can make half...
See AnswerQ: You graduate and get a $10,000 check from your
You graduate and get a $10,000 check from your grandparents. You decide to save it toward a down payment on a house. You invest it earning 10% per year and you think you will need to have $20,000 save...
See AnswerQ: Your friend tells you he has a very simple trick for taking
Your friend tells you he has a very simple trick for taking one-third off the time it takes to repay your mortgage: Use your Christmas bonus to make an extra payment on January 1 of each year (that is...
See AnswerQ: The mortgage on your house is five years old. It required
The mortgage on your house is five years old. It required monthly payments of $1402, had an original term of 30 years, and had an interest rate of 10% (APR). In the intervening five years, interest ra...
See AnswerQ: You have credit card debt of $25,000 that has
You have credit card debt of $25,000 that has an APR (monthly compounding) of 15%. Each month you pay a minimum monthly payment only. You are required to pay only the outstanding interest. You have re...
See AnswerQ: Your firm has taken out a $500,000 loan with
Your firm has taken out a $500,000 loan with 9% APR (compounded monthly) for some commercial property. As is common in commercial real estate, the loan is a 5-year loan based on a 15-year amortization...
See AnswerQ: Suppose Cisco Systems pays no dividends but spent $5 billion on
Suppose Cisco Systems pays no dividends but spent $5 billion on share repurchases last year. If Cisco’s equity cost of capital is 12%, and if the amount spent on repurchases is expected to grow by 8%...
See AnswerQ: In 1975, interest rates were 7.85% and the
In 1975, interest rates were 7.85% and the rate of inflation was 12.3% in the United States. What was the real interest rate in 1975? How would the purchasing power of your savings have changed over t...
See AnswerQ: If the rate of inflation is 5%, what nominal interest rate
If the rate of inflation is 5%, what nominal interest rate is necessary for you to earn a 3% real interest rate on your investment?
See Answer
