How to calculate the total interest paid over the life of a loan?

Assume you are going to buy a house that is for sale at $500,000. You have saved $100,000 for downpayment so the mortage will be for $400,000.

The bank quotes you two options. A 30 year, monthly payments loan at 6% or a 15 year loan at 5%.

Your friends tell you that if you go 15 years the total interest paid will be hundreds of thousands less.

You don't believe them so decide to do the math.

Easy way. Not surprisingly, there is an app for that. Excel has a formula.

CUMIPMT(rate, nper, pv, start_period, end_period, type)

For the 30 year loan it would be

CUMIPMT(6%/12 , 12*30 , $400,000, 1, 360, 0) 

Hard way. Do an amortization table and add all interest payments.

Curious about the answer?

Check the spreadsheet, you can make a copy and change it to your needs.

Total interest paid xls

What is a Dutch auction and how does it work?

A Dutch auction is way of offering/selling of goods to the public. The seller offers the lot to the general public. The actual price of the whole set is determined after all offers have been received at the level at which all shares could be sold. The public or buyers are supposed to state how many items thye want and at what price do they want them. 

The following example would illustrate it.

Assume the seller is trying to sell  10,000 shares of Ford Motor Company (F).

Buyers submit their orders...

Merida -- 1,500 shares at $15.00  each

Peter Pan --- 2,500 shares at $14.25 each 

Pop - Eye -- 2,500 shares at $14.00 each

Donald Duck --3,500 shares at $13.90 each

Kim Possible -- 4,000 shares at $13.85 each

Ben Ten -- 3,000 shares at $13,77 each.

... ...

In this case, the 10,000 shares are sold to Merida, Peter Pan, Pop Eye and Donald Duck for $13.90.  The whole lot can be sold. 

 

 

What is the cutoff GPA for a job in investment banking?

There is no magic bullet.  On the one hand, a 4.0 GPA does not guarantee an interview much less a job.

On the other hand, a 3.4 is not a death sentence either. In general anything above 3.5 is fine.  Make sure you list both your GPA and concentration GPA... if your GPA is 3.5 but your concentration GPA is 3.9, you have a story to tell.

Much more important than grades (I think) are internships and past experiences. Actions speak louder than words.

Having an inside champion (a person that can support your application) is also important. 

Done...

There is a more basic question. Why do you want investment banking job? Is it salary, prestige? Or is the the job itself?  The latter is much better answer than the former.  If you simply like the perks of the job you are in for a rough ride. If you like the job itself, you will find many ways to approach it.

If you "love" the job, then you need explain what have you done to prepare for such a career, job.

For example.

How many investment bankers do you know? 

How many of them would answer a phone call from you?

Have you interned at an investment bank?

Have you taken a directed study on the subject?

Have you volunteered at local foundation? Startup accelerators etc?

How many local organizations are you a member of?

Have you taken online courses on the subject? Podcasts, seminars? 

Are you familiar with the deal flow in your local community?

Have you taken courses on Real Estate, Valuation?

If you just discover your passion, no problem. 

Using a sports analogy. You are applying for a spot in the team.  You are competing against candidates that have been playing / preparing for the game since high school. They have gone to the gym, cross trained, etc. How does your application compare?   You are not disqualified just because you just started. There are many examples of late bloomers. 

But you will have to convince the coach to give you a chance to try out.  Make sure your first job(s) are stepping stones into the path.