...Loan Project: Buying a House Name Institution Professor’s Name Course title Date of submission Loan Project: Buying a House For this assignment, you will analyze a home mortgage loan. 1. Find a description, asking price, and real estate taxes of a house for sale, and decide on a purchase price you would be willing to pay (assuming you have the means). Find a current market interest rate for a 30-year fixed-rate mortgage having a down payment of 20 percent of the purchase price. Property Description: One of the best newly built homes in the neighborhood name, with all the upgrades one can imagine for a family to come home every day. The following are just a few of the upgrades include(Brickfront home, Granite counters, oak cherry cabinets, All new appliances, hardward floors throughout the main floor, fireplaces in family and master bedroom, huge walk in closets in all rooms, finished basement. Asking Price: $775,000 I am willing to pay the listing price after reviewing all the info provided about the house it is worth the buy. Estimate monthly payment: $3,144 Down Payment: 155,000 Interest rate for 30 years: 4.500% County Taxes: 9,042.93 2. Compute the down payment, amount financed, and the monthly mortgage payment (showing how to apply the appropriate financial formula and showing the calculations). Asking price = $775,000 Purchase price = Asking price = $775,000 Down payment = 20% of purchase...
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...Simple Interest (a) If $1,000 earns 3% annual simple interest, how much interest is earned and what is the future value in 4 years? (b) In order to have a balance of $2,000 in 3 years, how much money must be deposited now at 5% annual simple interest? Question 1 options: | Question 2 Suppose $5,000 is borrowed at 9% add-on interest, with monthly payments for three years. How much is paid in interest and what is the amount of each monthly payment? Question 2 options: | Question 3 $2,000 is deposited into an account paying interest compounded monthly. What will the balance be after 12 years, if the annual interest rate is 1%? 2%? ... 12%? (Complete the following table.) Annual interest rate, compounded monthly | Balance after 12 years | 1% | | 2% | | 3% | | 4% | | 5% | | 6% | | 7% | | 8% | | 9% | | 10% | | 11% | | 12% | | | Question 4 Carol starts with 1 cent. Suppose that at the end of the first day, she earns 1 cent interest, for a balance of two cents. At the end of the second day, she earns two cents interest, for a balance of four cents. At the end of the third day, she earns four cents interest, for a balance of eight cents. Continuing in the same way, what will Carol's balance be at the end of 30 days? Question 4 options: | Question 5 Suppose $1,200 is placed in a savings account earning 4% annual interest. Determine the balance after 10 years if interest is compounded. (a) annually ...
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...LOAN PROJECT: Buying a house in Baker, Florida Loan Project: Buying a house in Baker, Florida Purpose: To analyze the financial implications of purchasing a house in the current market House Description: Single family home, 4 bedrooms, 2 full 1 partial baths, 3,310 square feet. The lot size is 60.2 acres. 7001 Highway 189 North, Baker, Florida 32531 Asking price: 699,900.00 Real estate taxes: 2,341 Purchase price: 650,000.00 Current market interest rate: 3.80% on a 30 year fixed through TD Bank via www.bankrate.com 20% down payment: 130.00 (.20x650,000) Amount financed: 650,000.00-130,000=520,000.00 Monthly mortgage payment: 2422.98 Payment calculations -present value PV=520,000.00 -annual interest rates r=0.0380 -interest compounded m=12 -number of payments n= 360 The monthly mortgage payment is : PMT=0.003166667/1-0.3203956=520000(0.004659574)=2422.98 Monthly real estate taxes:195.08 (2341/12) Total monthly payment: 2618.06 Minimum income required Monthly income: 8726.87 Annual income: 104722.44 DATE | PAYMENT | PRINCIPAL | INTEREST | TOTAL INTEREST | BALANCE | Apr-15 | $2,422.98 | $776.31 | $1,646.67 | $1,646.67 | $519,223.69 | May-15 | $2,422.98 | $778.77 | $1,644.21 | $3,290.88 | $518,444.92 | Jun-15 | $2,422.98 | $781.24 | $1,641.74 | $4,932.62 | $517,663.68 | Jul-15 | $2,422.98 | $783.71 | $1,639.27 | $6,571.89 | $516,879.97 | Aug. 2015 | $2,422.98 | $786.19 | $1,636.79 | $8,208.67 | $516,093.78 | Sept. 2015...
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...PROJECT REPORT ON SMEs PROJECT FINANCING BY BANKS SUBMITTED TO: PROF. MAYANK PATEL AND PROF. RAVIRAJ GOHIL SUBMITTED BY: MRINKAL GARG 1011113076 2011-13 2012 ACKNOWLEDGEMENT This is to acknowledge all those without whom this project would not have been a reality. Firstly I would to convey my heartfelt thank to my Professors, Prof. Mayank Patel and Prof. Raviraj Gohil, who always help me by giving valuable suggestions and guidance for completion of this project. I am also very thankful to my father Mr. Vimal Garg who provide me a unique platform to fulfillment of this project and provide practical exposure to earn knowledge in the field of sanctioning procedure of bank loans and learn the problems faced by customers and bankers during the financing a project that could be done in a bank. I also want to extend my sincere thanks to “Agarwal & Co.” who’s immense support and dedicated their time toward it to sharing their knowledge in the field of finance and learn the day-to-day activities that are carried out in the CA firm. I would like to thanks to, Prof. BALA BHASKARAN (Director of Shanti Business School, Ahmadabad) who provides me this golden opportunity by giving this project. Table of Contents ACKNOWLEDGEMENT 2 EXECUTIVE SUMMARY: 4 Objective: 4 Brief Description of Project: 4 INTRODUCTION 6 Introduction of Project Financing 6 Introduction of Banking 8 SIGNIFICANCE OF THE STUDY 14 PROJECT OUTLINE FOR PROJECT FINANCE 15 ...
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...quality human capital as drivers. There is a lot to learn from the China, on its transition to occupy the position of the second largest economy and possibly the future world superpower. The premier was on a business tour to promote business for Chinese Companies, for the interest of the Peoples Republic of China. He came with good news for Kenya and Africa at large, that funding from China will come devoid of any crippling conditions! Of course this is refers to “conditions” other than loan conditions such as the amount must be paid back with interest. For all purposes, the interest rates appeared to be more commercial than concessional. And of course they will not look too closely whether or not the amounts are spent on the specific projects promised, so long as the loans are fully repaid! They know where the shoe pinches most, and they are ready to offer us relieve, at a cost. What they forgot to add is that really at the end of the day, it’s our business and for our interest, that the loans are...
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...decisions a company will face when choosing to finance a new project. Debt Financing is a more traditional approach. In Debt Financing a company seeks financing from a financial institution or a private debt through a group of investors in the form of a loan. The loan will have set terms such as interest, repayment schedule, and payment amounts. The company will be obligated to make payments on the loan regardless of the amount of revenue coming in. The loan also often has some form of collateral to guarantee the loan. Debt Financing has the advantage of being a fast way to obtain money to finance a project. Another advantage would be the fact that the costs of the loan are fixed they do not change unless renegotiated. Equity Financing is the securing of financing through the issuance of stock or an equity loan both of which give a portion of ownership to the lender. Stock is issued to investors which gives the investor part ownership of the company. This is a much greater risk to the investor purchasing the stock. If the company does fail then the stockholders lose their investment. Equity loans are based on the value of the company’s assets. Equity loans are also common place in the private world in the form of home equity loans. This is where money is borrowed against the value of the borrowers’ personal home. Equity must exist in the item being brought to the lender. For instance when looking to obtain an equity loan on a house, the house must either be paid for completely and...
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...Life Line (a complete series of personnel credit facility) Loan agst. Trust Receipt Transport Loan Real Estate Loan (Res. & Comm.) Loan Agst. Accepted Bill Industrial Term Loan Agricultural Term Loan Lease Finance Other Term Loan FMO Local currency Loan for SME FMO Foreign currency Loan Cash Credit (Hypothecation) Small Shop Financing Scheme Overdraft Dutch-Bangla Bank offers a wide range of corporate banking services. They include: Project finance The Bank encourages accepting purpose/project specific development funds on competitive terms towards economic upliftment and well being of the people/country by way of setting up a new stand alone, capital intensive project or for BMRE of an existing project. Working Capital finance The bank considers lending short –term working capital finance to entities engaged in manufacturing, assembling, processing, re-packaging of goods and commodities for domestic consumption or export market. However, unsecured loans (not collateralized) for working capital without justification or purpose is not considered. Syndications & Structured finance The Bank, on case to case basis, arranges loan syndications or approves disclosed participations in syndications provided such transactions meet the parameters separately established.oThe bank will at all times maintain at the minimum a pari-passu status to other banks in all lending relationships. Second mortgages or lower are not be accepted as primary collateral. Trade...
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...REPRESENTATION LETTER BY ULTIMATE LOAN RECIPIENT (a) Loan funds were not used for activities that would adversely affect the environment, or activities that limit the choice of reasonable alternatives prior to satisfying Rural Development environmental requirements; (b) Loan funds were not used to pay off or refinance any existing indebtedness or costs of the Project that was incurred prior to Rural Development receipt of the Intermediary’s completed application; (c) Loan funds were not used for any electric or telecommunications purpose or for the Intermediary’s electric or telecommunications operations, for affiliated operations of the Intermediary, or for the benefit of other Intermediaries or their affiliated operations, except those purposes contained in § 4280.15(f); (d) Loan funds were not used to pay the salaries of any employee or owner of the Intermediary, its subsidiaries, or affiliates, except for salaries incurred in administering a Revolving Loan Fund established under the REDG Program; (e) Loan funds were not used for community antenna or cable television systems or facilities; (f) Loan funds were not used for residential purposes such as residential dwellings and land sites; facilities to provide entertainment television; to transfer property between owners without making improvements that will promote or sustain economic development in Rural Areas; or for personal, non-business related vehicles; (g) Loan funds were not used where there...
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...Chapter 12 Project Finance David Gardner and James Wright HSBC Introduction The purpose of this chapter is to provide an overview of Project Finance. This chapter will outline what Project Finance is, the key features which distinguish it from other methods of financing, the motivations and circumstances for utilising it and the typical structuring considerations therein. Moreover, it will be shown to be a method of infrastructure finance 1 which has become increasingly relevant in the wake of the Global Financial Crisis 2 . What is Project Finance? Project Finance can be characterised in a variety of ways and there is no universally adopted definition but as a financing technique, the author’s definition is: “the raising of finance on a Limited Recourse basis, for the purposes of developing a large capitalintensive infrastructure project, where the borrower is a special purpose vehicle and repayment of the financing by the borrower will be dependent on the internally generated cashflows of the project” This definition in itself raises a number of interesting questions, including: What do we mean by ‘Limited Recourse’ financing – recourse to whom or what? Why is Project Finance typically used to finance large capital intensive infrastructure projects? Why is the borrower a special purpose vehicle (SPV) under a project financing? What happens if the internally generated cashflows of the project are not sufficient to repay the financiers of the project? These points will...
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...journey in 2001 and in just 12 years proved to country’s fastest growing bank. The Bank operates under a "double bottom line" agenda where profit and social responsibility goes hand in hand as it strives towards a poverty-free, enlightened Bangladesh. BRAC Bank Limited is a scheduled commercial bank in Bangladesh. It established under the Banking Companies Act, 1991 and its operation started on July 4, 2001 with a vision to be the market leader through to providing all sorts support to people in term of promoting corporate and small entrepreneurs and individuals all over the Bangladesh. Just as BRAC Bank has a corporate identity, they have a social identity too. As a Bank they are socially responsible. Fifty percent (50%) of BRAC Bank’s loan portfolio is diverted to Small and Medium enterprise Banking, and as a financial intermediary they channel funds from the surplus end to the needy. Country-wide network of SME Units centre to the end of small entrepreneurs to help them build their asset base. BRAC Bank is market leader in SME, striving for socio-economic upheaval in Bangladesh. The bottom line is, BRAC Bank do not support any finances that are detrimental to our environment. Some Important Features: * A portion of BRAC Banks revenue is channeled to support BRAC schools, where children study for free. 70% of these children are female. * Fastest growing Bank in the country for the last three years; * Leader in SME financing through 460 offices; * Biggest suit...
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...JANUARY 31, 2012 INFRASTRUCTURE SPECIAL COMMENT Default and Recovery Rates for Project Finance Bank Loans, 1983–2010 1. Introduction 1 2 4 7 12 14 15 28 37 37 39 60 60 Table of Contents: 1. INTRODUCTION 2. SUMMARY 3. OVERVIEW OF THE PROJECT FINANCE INDUSTRY 4. DATA AND METHODOLOGY 5. DISTRIBUTION OF PROJECTS 6. DISTRIBUTION OF DEFAULTS 7. DEFAULT RATE ANALYSIS 8. RECOVERY ANALYSIS 9. FURTHER ANALYSIS OF TIME TO DEFAULT AND TIME TO EMERGENCE BY INDUSTRY 10. EXPOSURE AT DEFAULT APPENDICES MOODY’S RELATED RESEARCH ACKNOWLEDGEMENT Analyst Contacts: NEW YORK 1.212.553.1653 This Special Comment (the “Study”) is an update to Moody’s initial study published in October 2010 (the “Initial Study”) examining the default and recovery performance of project finance bank loans. The Study documents Moody’s updated analysis of historical project finance bank loan default and recovery rates using updated and expanded aggregate data (the “Study Data Set”) from a consortium of leading sector lenders (together, the “Bank Group”). Moody’s wishes to acknowledge and thank each of the banks in the Bank Group for supporting and contributing to the Study. This Special Comment is an abridged version of a more comprehensive study undertaken on behalf of the Bank Group. The updated Study Data Set includes 3,533 projects which account for some 51% of all project finance transactions originated globally during a 27 year period from January 1, 1983 to December 31, 2010. The Study Data Set is...
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...of most of the bank failures which occurred between the 1988 to 2004 period will depend upon how much of the failed banks' assets are eventually recovered by the liquidators. The costs are almost certain to be substantial. Most of these bank failures were caused by unprofitable loans. Areas affecting more than half the loan portfolio were typical of the failed banks. Many of the bad debts were attributable to moral hazard: the adverse incentives on bank owners to adopt imprudent lending strategies, in particular insider lending and lending at high interest rates to borrowers in the most risky segments of the credit markets. Insider lending The single biggest contributor to the bad loans of many of the failed local banks was insider lending. In at least half of the bank failures referred to above, insider loans accounted for a substantial proportion of the bad debts. Most of the larger local bank failures in Cameroon, such as the Cameroon Bank, B.I.A.O. Bank and B.I.C.I.C. Bank, involved extensive insider lending, often to politicians. Insider loans accounted for 65 per cent of the total loans of these local banks, virtually all of which was unrecoverable. Almost half of the loan portfolio of one of the local banks local banks...
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...Bangladesh are exposed as well as interNational markets. They have to stay update with their practice and standards to meet the demands of achieving harmony in the high standards of a free economy. Rationale of the Study: Now a days banking sector have built up as the most important player of the economy. Economists have observed that loan is of the most important aspects of economic activity because of its great role in establishing various projects that generates production and thus generating employment. The only important aspect of loan is economic and social development in addition to achieving a suitable profit margin. Islamic banks consider loan as the basic motivation for community development and a means to get rid of social and economic problems through employment and operation of available resources, such as money and individuals. Especially after the financial crunch, Islamic banking and Islamic loan have proved to be more profitable and less risky. Since EXIM Bank is a Shariah based bank, the major portion of it assets consists of Loan. By analyzing the loan the productivity of a bank can be analyzed. Moreover analyzing the loan helps us to...
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...Introduction The Course Project is an opportunity for you to apply concepts learned to a real-life simulation experience. Throughout the Course Project, you will assume that you work as a financial analyst for AirJet Best Parts, Inc. The Course Project is provided in two parts as follows: Part I – In Part I, you work with AirJet Best Parts, Inc. staff to identify the best loan options, as well as to valuate stocks and bonds. Part II – In Part II, you will provide the company with a recommendation for purchasing a new machine. You will base your recommendation on the Net Present Value (NPV) of the capital investment project using the cost of capital (WACC) as your discount rate. About AirJet Best Parts, Inc. AirJet Best Parts, Inc. is a company dedicated to the design and manufacturing of aviation and airplane technologies and parts. The company has commercial and military clients worldwide. Task 1: Assessing loan options for AirJet Best Parts, Inc. The company needs to finance $8,000,000 for a new factory in Mexico. The funds will be obtained through a commercial loan and by issuing corporate bonds. Here is some of the information regarding the APRs offered by two well-known commercial banks. Bank | APR | Number of Times Compounded | National First | Prime Rate + 6.75% | Semiannually | Regions Best | 13.17 | Monthly | 1. Assuming that AirJet Parts, Inc. is considering loans from National First and Regions Best, what are the EARs for these two banks...
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...of business either for meeting day to operations or for starting up a new project. One of the important sources of raising finance is loans from banks. Commercial lending is one of the prime functions of any bank. But how does the bank appraises the creditworthiness of a borrower? What are the criterions to be fulfilled for granting loans? What are the tools used by the banks to appraise the loan proposal? These questions are being answered in this paper. This paper describes the credit appraisal process followed in Allahabad Bank. * Assistant Professor, Department of Accounting and Finance, Amity Business School, Amity University, Noida. A Monthly Double-Blind Peer Reviewed Refereed Open Access International e-Journal - Included in the International Serial Directories Indexed & Listed at: Ulrich's Periodicals Directory ©, U.S.A., Open J-Gage as well as in Cabell’s Directories of Publishing Opportunities, U.S.A. International Journal of Management, IT and Engineering http://www.ijmra.us 537 May IJMIE Volume 2, Issue 5 ISSN: 2249-0558 2012 ___________________________________________________________ Companies can avail a variety of credit facilities from banks for meeting the requirement of funds. The various credit products which can be availed are listed belowFunded Credit Facilities- it refers to those facilities where transfer of funds takes place Overdraft Cash Credit Term Loans ( long term finance) Bill discounting Non Funded Credit Facilities- it refers...
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