Interested to Buy Any Domain ? << Click Here >> for more details...
ACCOUNTING AND FINANCIAL ENGINEERING - EXAMPLE 34.19 : In the purchase of a unit of engineering office, a loan has been made to a bank with the following details : Term N = 30 years; interest rate R = 8.07 % / year; security : primary residence; present value pv = $450000; salary = $75000 / year or $56000 / year after tax. (a) Let the discounted present value PV = [ 1 - 1 / (1 + r) ^ n ] / r for arrears, where r = interest rate of discount, n = number of payment, ^ = symbol for power. If the loan repayment was made monthly : (i) calculate the value of r where r = R / k and R is in decimal value; (ii) find the value of n where n = kN; (iii) estimate the value of k where k = number of repayment per year; (iv) calculate the value of PV based on the formula of discounted present value. (b) Calculate the monthly repayment of the loan, MR based on the following formula : pv = PV x MR. (c) Find the percentage of salary remains after paying the loan every month.
- 1 Answers
- 2148 Views
- I also Faced
- E-Mail Answers
Answer Posted / kangchuentat
ACCOUNTING AND FINANCIAL ENGINEERING - ANSWER 34.19 : Value of k has to be found first : 12 months / year, then k = 12. (a) (i) r = R / k = 0.0807 / 12 = 0.006725. (ii) n = kN = 12 x 30 = 360. (iii) k = 12. (iv) PV = [ 1 - 1 / (1 + r) ^ n ] / r = [ 1 - 1 / (1 + 0.006725) ^ 360 ] / 0.006725 = 135.382. (b) MR = pv / PV = $450000 / 135.382 = $3323.928. (c) Annual repayment = MR x k = $3323.928 x 12 = $39887.136. Percentage of salary remains after paying loan = 100 [ 1 - (annual repayment) / (annual salary after tax) ] = 100 (1 - 39887.136 / 56000) = 28.773 %. The answer is given by Kang Chuen Tat; PO Box 6263, Dandenong, Victoria VIC 3175, Australia; SMS +61405421706; chuentat@hotmail.com; http://kangchuentat.wordpress.com.
| Is This Answer Correct ? | 0 Yes | 0 No |
Post New Answer View All Answers
What do you understand by wet bulb globe temperature?
What type of pump may be appropriate for a liquid near saturation, a low flow rate, and very limited npsha?
What are some typical applications for glass-lined reactors?
Name some common causes of control valve noise?
Explain how do you design a vapor-liquid separator or a flash drum?
Explain what is a good way to get started in doing a plant-wide steam consumption analysis?
What is a good source of equations for calculating discharge flowrates from accidental releases?
How can metals be removed from aqueous waste streams?
Explain what are some common precipitating agents used to remove metals from aqueous waste streams?
What are the merits of using a falling film evaporator?
why screw compressor use for ammonia compression?
Name the three classes of organic solvents?
What is a good approximation for the heat transfer coefficient of hydrocarbons inside 3/4" tubes?
Are there any alternatives to scraping a shell and tube if a capacity increase will make the pressure drop across the exchanger too large?
What is a good method of analyzing powders for composition?
