Suppose a farmer wants to borrow $176,590.00 to buy a tract of land. The BCS ban
ID: 2787847 • Letter: S
Question
Suppose a farmer wants to borrow $176,590.00 to buy a tract of land. The BCS bank will make a 22-year loan fully amortized at 6.19% (annual payments). A $443.00 loan fee and stock purchase is required. The borrower stock requirement is the lesser of $1,000 or 3.00% of loan amount.
(i) Calculate the loan principal.
a. $181,521.05 b. $178,089.12
c. $182,508.25 d. $178,033.00
Enter Response Here:
(ii) Calculate the required stock purchase.
a. $5,340.99 b. $1,000.00
c. $5,274.64 d. $1,760.24
Enter Response Here:
(iii) Calculate the annual loan payments.
a. $15,032.59 b. $15,037.33
c. $15,410.47 d. $15,327.12
Explanation / Answer
i)
Loan Principal = Loan Amount + Stock Purchase + Loan Fees
Stock Purchase = 3% of 176,590 or 1000 which ever is less = $ 1000
Loan Principal = 176590+443+ 1000 = $ 178,033
ii)
Required Stock Purchase =1000 as it is less than 3% of 176590 = $ 5297.7
iii)
Annual Loan Payments = PMT(6.19%,22,178033) = 15,030.02
Note : For iii) none of the options seem to be right. Can you please recheck the options.
Related Questions
drjack9650@gmail.com
Navigate
Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.