- Budgeting
- Cash Management
- Consumer and Mortgage Loans
- Debt and Debt Reduction
- Time Value of Money 1: Present and Future Value
- Time Value of Money 2: Inflation, Real Returns, Annuities, and Amortized Loans
- Insurance 1: Basics
- Insurance 2: Life Insurance
- Insurance 3: Health, Long-term Care, and Disability Insurance
- Insurance 4: Auto, Homeowners, and Liability Insurance
- The Home Decision
- The Auto Decision
- Family 1: Money and Marriage
- Family 2: Teaching Children Financial Responsibility
- Family 3: Financing Children’s Education and Missions
- Investments A: Key Lessons of Investing
- Investments B: Key Lessons of Investing
Case Study #4 Answers
1. Calculate payment for loan C.
N=30, I=5.5%, PV = -$200,000 PMT = $13,761.08
2. Calculate amount received after all fees (2 points).
$200,000 –2 points ($2,000 * 2) - 1,500 = $194,500
3. Calculate the balance owed after 12 years (18 years remaining). The PV of 18 years of the PMT is:
N=18, I=5.5%, PMT= -$13,761.08, PV = $154,758.11
4. Calculate effective interest rate to lender.
Set your FV at year 12 to = $ 154,758.11, PMT= $ 13,761.08, N = 12, PV = -$194,500, Solve for I = ?
I = 5.85%
Loan C saves .15% and .13% over Loans A and B.
