MAT 101 Excelsior College Loan Options Case Research Paper

Description

This submission is about responding to four other student post from my discussion board. The responses don’t have to be long just relevant contributions to solving or understanding the problem. Please see attachment.Please respond to the 4 student Post listed below.Communicate clearly. Do not use abbreviations common in texting.All your responses must make important contributions to solving or understanding the problem. These posts must be relevant, unique (not repeating ideas from someone else’s post), and justified (you explain your reasoning in a way that others can understand). You do not need to write extensively but contribute thoughtfully in ways that help us all learn about important mathematical ideas. Thoughtful questions are valid contributions.Please see the post below and remember they don’t have to be long just relevant contributions to solving or understanding the problem.Please see attachment for discussion question to provide guidance.

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This submission is about responding to four other student post from my discussion board. The
responses don’t have to be long just relevant contributions to solving or understanding the
problem. Please see attachment.
Please respond to the 4 student Post listed below.
Communicate clearly. Do not use abbreviations common in texting.
All your responses must make important contributions to solving or understanding the
problem. These posts must be relevant, unique (not repeating ideas from someone
else’s post), and justified (you explain your reasoning in a way that others can
understand). You do not need to write extensively but contribute thoughtfully in ways
that help us all learn about important mathematical ideas. Thoughtful questions are
valid contributions.
Please see the post below and remember they don’t have to be long just relevant
contributions to solving or understanding the problem.
Please see attachment for discussion question to provide guidance.
Post 1
Hi Class,
Here is how I interpret the two fees being assessed by the online Line Bank and the Local Small Business
Company financing.
First, Local Small Business 3% origination fee, I’m assuming since it’s a fee it’s in addition to the $11,800.
Second, the $1000 online banking service, it states applied, so that adds an additional $1000 to the
principal and we’re she’s now financing $11,200 for this option.
—————————————————————————————–If monthly payment and price are the only factors then the Online Construction is the best option. It
offers the lowest monthly payment, the small amount of interest paid to the bank even with the $1000
financing fee. However if Ramona can’t afford the extra $32.50, then the Local Small Business Company
is her best option.
$10,200 Project Cost
+1,000.00 applied to balance
$11,200 Loan Amount – 11.9% APR 4 years
$294.39 monthly payment
$2930.69Interest
$14,130.69 Principal and Interest
𝑃𝑀𝑇 =
. 119
$11200 𝑥 ( 12 )
[1 − (1 +
. 119(−12𝑥4)
)]
12
𝑃𝑀𝑇 =
$11,200 𝑥 (. 0099166666)
[1 − (1 +. 0099166666)−48 )]
$111.07
𝑃𝑀𝑇 = [1−(.622721856376127 )] = $294.39
Large Home Improvement Store
Zero % loans are really enticing, but if you can’t pay off the loan in the first year they normally hit you
with high interest rates to quickly recoup their $1200 back. Obviously the 16.99% even after ZERO % for
the first year has a higher monthly payment and cost you the most interest even if the term is the
shortest.
$13,200
-1,200 One year of 0% financing $100 x 12 monthly payments
$12,000 Financed
16.99% for 3 years
$427.77 monthly for 36 months
$3,399.83 in Interest
$15,399.83 Interest and Principal
Local Small Business Home Improvement Center
The Local Small Business Company has the lowest monthly payment and interest rate, however you’re
making 12 additional payments and in the end you’re also paying significantly more interest either of
the other two options.
$11,800
$11,446 Financed, 7.5% for7.5 5 years
$261.89 Monthly Payment for 60 months
$3913.31 in Interest
$15713.31 Interest and Principal
+$354.00 (3% origination fee) paid up front
$16,067.31 Total
Closing remarks, a lot of businesses and finance companies offer lower rates or “Zero” rates to hook you
in. They add fees and longer terms which will cost you more in the end. Additionally, many people only
look at the payment, its human nature. We want that car or other item and can afford $XX not really
worrying about what the real cost after you’ve factored in the interest you paid over the term of the
loan. Credit Cards and revolving credit are a whole other story….
Post 2
Hello Class,
•
Large Home Improvement Store:
Monthly payment:
1 year with $100 monthly payment and 0% interest =
13200 – 1200 = 12000
12000 x (0.1699/12)/1-(1+0.1699/12) ^-12(3) =
$427.77
•
Local Small Business Home Improvement Company
Monthly payment:
11800 – 354 (3% of 11800) = 11446
11446 x (0.075/12)/1-(1+0.075/12) ^ -12(5) =
$229.35
•
Online Constriction Business
Monthly payment:
10200 – 1000 = 9200
9200 x (0.119/12)/1-(1+0.119/12) ^ -12(4)
$241.81
TOTAL AMOUNT PAID:
•
•
•
12*3 = 36*427.77= $15399.72 + 1200 = $16599.73
12*5 = 60*229.35 = $13761+ 354 = $14115
12*4 = 48*241.81 = $11606.88 + 1000 = $12606.88
Percentage of interest paid:
•
•
•
73 – 1200 = 15399.73-13200 = 2199.73/15399.73 X 100 = 14.3%
14115 – 354 = 13761-11800 = 1961/13761 x 100 =3%
88 – 1000 = 11606.88-10200 = 1406.88/11606.88 x100 = 12.12%
These percentages are telling you the amount of payments that were spent paying off
the interest.
I would suggest picking the online construction company. The monthly payment is not
the lowest, but she’ll pay less in total and the less percentage paying the interest.
Post 3
What I did to start was to break down all three loans. First lets figure out the monthly payments using
the following formula.
PMT= P*(APR as decimal/payment frequency “n”)/(1-(1+APR/n)^(-n*y))
Option 1 Big Business offer:
$13,200.00 0% for 1 year if $100.00 monthly payments are made. The 16.99% for 3 years.
First, we need to subtract 12 payments of $100.00 from the total principal
13200.00-1200.00= $12,00.00 this is the total that will be affected by the 16.99% if Ramona
makes the $100.00 monthly payments.
Now to figure the remaining monthly payments using the above formula.
12000*(0.1699/12)/(1-(1+0.1699/12)^(-12*3))= $427.77 per month.
Next, lets figure up the total amount that will be paid for this loan using the formula:
(PMT amt)(# of PMT per year)(# of years)=
(4227.77)(12)(3)= $15,399.72 total paid with this option.
Nest, lets figure the precent paid toward principal, and amount paid toward interest using the following
formulas:
% toward principal= principal amt/total amtX100
% toward interest=. amt of interest/total amtX100
% toward principal= 12000.00/15399.72=
77.9%
% toward interest= 3399.72/12000.00=
28.3%
We need do now repeat all of these steps for the next two loan types.
Option 2 Small Local business:
$11,800.00 with a 3% origination fee, then 7.5% APR for 5 years.
First, we need to factor the 3% fee in order to calculate the total monthly payments, and the principal.
118000*1.03= $12,154.00 This will be the total amount financed.
Next, figure the total monthly payments.
PMT= 12154.00*(0.075/12)/(1-(1+0.075/12)^(-60))= $243.54 per month.
Next, lets figure the total amount that will be pain on the loan:
(243.54)(12)(5)= $14,612.40 total amount paid with this option.
Finally, figure up the precent paid towards the principal, and the precent paid toeards interest.
% toward principal= 12154.00/14612.40=
83.2%
% toward interest= 2458.40/14612.40=
16.82%
Option 3 Online Business:
$10,200.00 with $1,000.00 upfront before financing. Then 11.9% for 4 years.
First, we know that in order to have financing with the online business, you will need to pay $1,000.00
up front. This will reduce your total financed to $9,200.00.
Next, lets figure the total monthly payments.
PMT= 9200*(0.119/12)/(1-(1+0.119/12)^(-48))= $279.47 per month.
Next, figure the total principal to be paid:
(279.47)(12)(4)= $13,414.56 total amount paid with this option.
Finally, figure up the precent paid towards the principal, and the precent paid toeards interest.
% toward principal= 9200.00/13414.56
68.6%
% toward Interest: 9200.00/4214.56=
21.8%
Post 4
Hello Group 3!
Time for another round of math. I started this week by breaking down all the numbers
we will need to complete the problem
First we need to figure out the monthly amounts for the multiple improvement options.
-Large Home Improvement Store:
Year 1 payment is ¼ of the $13,200 total.
$13,200/4 = $3,300. $3,300/12(monthly) = $275 for the 1st year
Year 2 – 4 payments are the total amount ($13,200) minus the $3,300 (see above) =
$9,900
This amount ($9,900), compounded for 36 months with the rate of 16.99% (.1699)
9900 x (.1699/12) / 1 – (1+.1699/12) -12(3)
=$352.91 is the amount for the 3 years remaining
This was a lot for the first round. I will continue after seeing if I am going down the right
path.
M4D1: Remodeling the Kitchen
In this discussion, you will solve a mathematics problem about financing a kitchen remodeling project. This group discussion will help
prepare you for activity Part 2, in which you will write and submit an individual complete solution to a related problem.
Answer the following questions.
Ramona Garcia will be remodeling her kitchen before she places her home on the market to sell. She researched what three local
companies would charge her for the remodeling and their best financing option for each company. Her research revealed the following
results.
Company
Total
Remodeling Financing Terms Ramona is Considering
Cost
Large
Home
Improvement
$13,200
Store
Financing through the bank servicing the national home improvement company: 1 year 0%
financing with a minimum monthly payment of $100; 16.99% APR for the remaining 3
years
Local
Small
Business
Home
$11,800
Improvement
Company
Financing through her local credit union: 3% origination fee to be paid first then 7.5% APR
for 5 years
Online
Construction
Business
Financing through an online banking service: $1,000 applied toward the project before
payback begins then 11.9% APR for 4 years.
$10,200
1. Calculate the monthly payments for each option given that interest is compounded monthly.
2.
3.
4.
5.
What is the total amount that must be paid for each option?
What percentage of the total amounts to be paid back to each financial institution is interest?
How would you explain to Ramona the differences between these percentages and their corresponding APR’s?
Based on the financial outcomes for each option, which company would you suggest that Ramona choose to remodel her
kitchen? Defend your suggestion.
This submission is about responding to four other student post from my discussion board. The
responses don’t have to be long just relevant contributions to solving or understanding the
problem. Please see attachment.
Please respond to the 4 student Post listed below.
Communicate clearly. Do not use abbreviations common in texting.
All your responses must make important contributions to solving or understanding the
problem. These posts must be relevant, unique (not repeating ideas from someone
else’s post), and justified (you explain your reasoning in a way that others can
understand). You do not need to write extensively but contribute thoughtfully in ways
that help us all learn about important mathematical ideas. Thoughtful questions are
valid contributions.
Please see the post below and remember they don’t have to be long just relevant
contributions to solving or understanding the problem.
Please see attachment for discussion question to provide guidance.
Post 1
Hi Class,
Here is how I interpret the two fees being assessed by the online Line Bank and the Local Small Business
Company financing.
First, Local Small Business 3% origination fee, I’m assuming since it’s a fee it’s in addition to the $11,800.
Second, the $1000 online banking service, it states applied, so that adds an additional $1000 to the
principal and we’re she’s now financing $11,200 for this option.
—————————————————————————————–If monthly payment and price are the only factors then the Online Construction is the best option. It
offers the lowest monthly payment, the small amount of interest paid to the bank even with the $1000
financing fee. However if Ramona can’t afford the extra $32.50, then the Local Small Business Company
is her best option.
$10,200 Project Cost
+1,000.00 applied to balance
$11,200 Loan Amount – 11.9% APR 4 years
$294.39 monthly payment
$2930.69Interest
$14,130.69 Principal and Interest
𝑃𝑀𝑇 =
. 119
$11200 𝑥 ( 12 )
[1 − (1 +
. 119(−12𝑥4)
)]
12
𝑃𝑀𝑇 =
$11,200 𝑥 (. 0099166666)
[1 − (1 +. 0099166666)−48 )]
$111.07
𝑃𝑀𝑇 = [1−(.622721856376127 )] = $294.39
Large Home Improvement Store
Zero % loans are really enticing, but if you can’t pay off the loan in the first year they normally hit you
with high interest rates to quickly recoup their $1200 back. Obviously the 16.99% even after ZERO % for
the first year has a higher monthly payment and cost you the most interest even if the term is the
shortest.
$13,200
-1,200 One year of 0% financing $100 x 12 monthly payments
$12,000 Financed
16.99% for 3 years
$427.77 monthly for 36 months
$3,399.83 in Interest
$15,399.83 Interest and Principal
Local Small Business Home Improvement Center
The Local Small Business Company has the lowest monthly payment and interest rate, however you’re
making 12 additional payments and in the end you’re also paying significantly more interest either of
the other two options.
$11,800
$11,446 Financed, 7.5% for7.5 5 years
$261.89 Monthly Payment for 60 months
$3913.31 in Interest
$15713.31 Interest and Principal
+$354.00 (3% origination fee) paid up front
$16,067.31 Total
Closing remarks, a lot of businesses and finance companies offer lower rates or “Zero” rates to hook you
in. They add fees and longer terms which will cost you more in the end. Additionally, many people only
look at the payment, its human nature. We want that car or other item and can afford $XX not really
worrying about what the real cost after you’ve factored in the interest you paid over the term of the
loan. Credit Cards and revolving credit are a whole other story….
Post 2
Hello Class,
•
Large Home Improvement Store:
Monthly payment:
1 year with $100 monthly payment and 0% interest =
13200 – 1200 = 12000
12000 x (0.1699/12)/1-(1+0.1699/12) ^-12(3) =
$427.77
•
Local Small Business Home Improvement Company
Monthly payment:
11800 – 354 (3% of 11800) = 11446
11446 x (0.075/12)/1-(1+0.075/12) ^ -12(5) =
$229.35
•
Online Constriction Business
Monthly payment:
10200 – 1000 = 9200
9200 x (0.119/12)/1-(1+0.119/12) ^ -12(4)
$241.81
TOTAL AMOUNT PAID:
•
•
•
12*3 = 36*427.77= $15399.72 + 1200 = $16599.73
12*5 = 60*229.35 = $13761+ 354 = $14115
12*4 = 48*241.81 = $11606.88 + 1000 = $12606.88
Percentage of interest paid:
•
•
•
73 – 1200 = 15399.73-13200 = 2199.73/15399.73 X 100 = 14.3%
14115 – 354 = 13761-11800 = 1961/13761 x 100 =3%
88 – 1000 = 11606.88-10200 = 1406.88/11606.88 x100 = 12.12%
These percentages are telling you the amount of payments that were spent paying off
the interest.
I would suggest picking the online construction company. The monthly payment is not
the lowest, but she’ll pay less in total and the less percentage paying the interest.
Post 3
What I did to start was to break down all three loans. First lets figure out the monthly payments using
the following formula.
PMT= P*(APR as decimal/payment frequency “n”)/(1-(1+APR/n)^(-n*y))
Option 1 Big Business offer:
$13,200.00 0% for 1 year if $100.00 monthly payments are made. The 16.99% for 3 years.
First, we need to subtract 12 payments of $100.00 from the total principal
13200.00-1200.00= $12,00.00 this is the total that will be affected by the 16.99% if Ramona
makes the $100.00 monthly payments.
Now to figure the remaining monthly payments using the above formula.
12000*(0.1699/12)/(1-(1+0.1699/12)^(-12*3))= $427.77 per month.
Next, lets figure up the total amount that will be paid for this loan using the formula:
(PMT amt)(# of PMT per year)(# of years)=
(4227.77)(12)(3)= $15,399.72 total paid with this option.
Nest, lets figure the precent paid toward principal, and amount paid toward interest using the following
formulas:
% toward principal= principal amt/total amtX100
% toward interest=. amt of interest/total amtX100
% toward principal= 12000.00/15399.72=
77.9%
% toward interest= 3399.72/12000.00=
28.3%
We need do now repeat all of these steps for the next two loan types.
Option 2 Small Local business:
$11,800.00 with a 3% origination fee, then 7.5% APR for 5 years.
First, we need to factor the 3% fee in order to calculate the total monthly payments, and the principal.
118000*1.03= $12,154.00 This will be the total amount financed.
Next, figure the total monthly payments.
PMT= 12154.00*(0.075/12)/(1-(1+0.075/12)^(-60))= $243.54 per month.
Next, lets figure the total amount that will be pain on the loan:
(243.54)(12)(5)= $14,612.40 total amount paid with this option.
Finally, figure up the precent paid towards the principal, and the precent paid toeards interest.
% toward principal= 12154.00/14612.40=
83.2%
% toward interest= 2458.40/14612.40=
16.82%
Option 3 Online Business:
$10,200.00 with $1,000.00 upfront before financing. Then 11.9% for 4 years.
First, we know that in order to have financing with the online business, you will need to pay $1,000.00
up front. This will reduce your total financed to $9,200.00.
Next, lets figure the total monthly payments.
PMT= 9200*(0.119/12)/(1-(1+0.119/12)^(-48))= $279.47 per month.
Next, figure the total principal to be paid:
(279.47)(12)(4)= $13,414.56 total amount paid with this option.
Finally, figure up the precent paid towards the principal, and the precent paid toeards interest.
% toward principal= 9200.00/13414.56
68.6%
% toward Interest: 9200.00/4214.56=
21.8%
Post 4
Hello Group 3!
Time for another round of math. I started this week by breaking down all the numbers
we will need to complete the problem
First we need to figure out the monthly amounts for the multiple improvement options.
-Large Home Improvement Store:
Year 1 payment is ¼ of the $13,200 total.
$13,200/4 = $3,300. $3,300/12(monthly) = $275 for the 1st year
Year 2 – 4 payments are the total amount ($13,200) minus the $3,300 (see above) =
$9,900
This amount ($9,900), compounded for 36 months with the rate of 16.99% (.1699)
9900 x (.1699/12) / 1 – (1+.1699/12) -12(3)
=$352.91 is the amount for the 3 years remaining
This was a lot for the first round. I will continue after seeing if I am going down the right
path.

Purchase answer to see full
attachment

Tags:
construction business

total repayment amount

interest rate of a loan

Percentage Interest

Total cumulative Interest

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