- 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 #3 Answers
1. Calculate payment for loan B
N=30, I=5.75%, PV = -$200,000 PMT = $14,143.25
2. Set PV = to the amount you receive after all costs
$200,000 – 1 point ($2,000 * 1) - 1,500 = $196,500
3. Solve for your balloon payment at year 12
N = 18, PMT = $ 14,143.25, I = 5.75, PV = $156,054.03
4. Solve for your effective rate
PMT = $ 14,143.25, PV is -$196,500, N = 12, FV = $156,054.03, solve for I
I = 5.98% Loan B is still cheaper (barely)
