- 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 #2 Answers
Note: Loan A has an EIR of 6% as there are no fees and points. In that case, your EIR = your APR.
1. Calculate payment for loan B.
N=30, I=5.75%, PV = -$200,000 PMT = ?
PMT = $14,143.25
2. Calculate the amount you received after all fees.
$200,000 – 1 point ($2,000 * 1) - 1,500 = ?
$196,500
3. Calculate your effective interest rate.
Set your PMT= $14,143.25, N = 30, PV = -$196,500, Solve for I
I = 5.91% Loan B is the cheaper loan
