You and your spouse have the following retirement accounts. Tell me how much you can take out orborrow from each account without incurring a tax penalty. Assume that you are a first time homebuyer and you are in the 17% Federal and state tax brackets.Your IRA $9,000Your Spouse's IRA $8,000Your Roth IRA $18,000 (10,000 of contributions)Your Spouse's Roth $15,000 (8,500 of contributions)Your 401(k) $110,000Based on the information above, answer the following questions:* number your answers 1,2,31) How much can you take out or borrow without penalty for a down payment?2) What is the maximum amount you can pay for a house if you put 20% down. Assume that youcan borrow any amount.

IRA- Individual retirement account is the account being maintained during the employment life of the…

Answered: 1) How much can you take out or borrow…

1) How much can you take out or borrow without penalty for a down payment? 2) What is the maximum amount you can pay for a house if you put 20% down. Assume that you can borrow any amount.

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

See similar textbooks

Related questions

Q: s. Mortgages are the reverse of annuities, because you get a lump-sum amount as a loan in the…

A: The given problem can be solved using PMT function in excel. PMT function computes installment…

Q: When you purchased your house 4 years ago, you took out a 300000, 30 year FRM loan at 7.5%. You also…

A: Mortgage loans are secured loans and these loans make buying of home easy because paid by equal…

Q: Suppose a man took out a 30-year loan with an annual rate of 6% to put an addition on his house. His…

A: Loan year=30 years Interest=6% Computer cost =$ 1,500 Here,we need to find amount of interest paid…

Q: Suppose you are buying a house. You find the perfect one for $215,000. The bank offers you a 30-year…

A: When you take out a loan mortgage then you make fixed periodic payments. In this case the payments…

Q: A landlord needs to update a rental house due to it's age, so it can be habitable again. If he h to…

A: Loans you take depends on the ability to pay back and that depends on interest rate and time period…

Q: Suppose a man took out a 30-year loan with an annual rate of 7% to put an addition on his house. His…

A: Loan period = 30 years Annual rate = 7%Computer cost = $1500

Q: ou want to buy a home but not take out a mortgage. You want to buy it outright when you are able to…

A: Future value is the value of present cashflow compounded to future date at specified rate. formula:…

Q: You want to buy a $191,000 home. You plan to pay 15% as a down payment, and take out a 30 year loan…

A: Cost of home = $191,000Down payment = 15%Loan terms = 30 yearsInterest rate = 7%

Q: You want to buy a $210,000 home. You plan to pay $10500 as a down payment, and take out a 30 year…

A: The loan amount would be the remaining amount after deducting the down payment from the purchase…

Q: ou want to buy a $224,000 home. You plan to pay 15% as a down payment, and take out a 20 year loan…

A: Monthly payments on an amortized loan refer to a fixed amount of money that a borrower pays each…

Q: Suppose your bank’s loan officer tells you that if you take out a mortgage (i.e., you borrow…

A: A short sale in terms of real estate is one in which a house is sold for a price that is less than…

Q: You'd like to purchase a house. You're monthly take home pay is $4560. You'd like to use one fourth…

A: PMT is the periodic payment, in this case it is paid monthly.

Q: Directions: Read the problem carefully and solve what is being asked using partial payments on loan.…

A: PMT Function: The PMT function is a type of financial function which helps to determine the total…

Q: You are buying a house and have saved a down payment of $15,000. You can afford a monthly payment of…

A: Borrowings are the liability that is used to finance the requirement of the funds. The borrower…

Q: You want to buy a $206,000 home. You plan to pay 20% as a down payment, and take out a 30 year loan…

A: Down payment in a loan is the proportion of the total amount of loan that the borrower pays from his…

Q: using the maximum ratios for a conventional mortgage, how big a monthly payment could one afford if…

A: Conventional Mortgage: It is any sort of home buyer’s credit that isn't offered or secured by a…

Q: You are purchasing a home for $300,000 and have a 20% down payment. You are deciding between a…

A: Here, To Find: Part A. Amount paid for points on the closing of the loan =? Part B. Decision from…

Q: Mortgages, loans taken to purchase a property, involve regular payments at fixed intervals and are…

A: STEP 1 MORTGAGE When you and a lender enter into a mortgage, the lender is granted the power to…

Q: 2. I decided to buy a house for $289,900. I have enough in savings to put 10% down on the house and…

Q: A public relations specialist earns $71,500 salary each year. He/she wants to spend no more than…

A: A loan is a financial arrangement in which one or more people, companies, or other entities lend…

Q: n Guimo is going to purchase a house with a purchase price of P. ay as a down payment. He is going…

A: It is assumed that monthly payments are to be made. The given problem can be solved using PMT…

Q: gages, loans taken to purchase a property, involve regular payments at fixed intervals and are…

A: Loans are paid by fixed equal monthly payments and these payments carry the payment for interest and…

Q: Suppose you buy a $3,500,000 house and lot with an equity of $600,000. Is it possible to compute the…

A: Equity in this scenario is the down payment made on the loan.

Q: You saved 18,000$ for a down payment on a house. Your bank requires a down payment of 15%. What is…

A: Introduction: Down payment or mortgage installment refers to the periodic payment made against the…

Q: What is the annuity payment?

A: Time value of money (TVM) refers to the method used to measure the amount of money at different…

Q: You want to buy a home. You can borrow 95% of the purchase price. Assuming you can make a down…

A: To calculate the price of home we will use the below formula Home price = Down payment/(1-Loan to…

Q: QUESTION 2 You would like to purchase a home and are interested to find out how much you can borrow.…

A: Compound = monthly = 12Monthly Payment = p = $2500Time = t = 30 * 12 = 360Interest rate = r = 6 / 12…

Q: Suppose you want to buy a new house. You currently have $15 000 and you figure you need to have a…

A: Current amount (P) = $15000 House cost = $150000 Down payment and closing costs needed (F) = (10% +…

Q: You have saved $14000 for a down payment on a house. Your bank requires a minimum down payment of…

A: A down payment is a sum of money that the borrower contributes up ahead towards the cost of a loan…

Q: What does this tell you about total cost when financing for longer periods?

A: Leasing a vehicle refers to driving a car through periodic payments towards the car without actually…

Q: . You are purchasing a house for $310,000. You plan to take out a 25-year loan to pay for the…

A: a. The monthly payments will be $1812. Note: The calculation has been made on excel.

Q: Use the PMT function or your buy/rent calculator. You bought a house for $650,000 and had an LTV of…

A: Assuming payments are made on monthly basis Actual Price of the house = $650,000 LTV = 75% Time = t…

Q: You have saved $22,000 for a down payment on a house. Your bank requires a minimum down payment of…

A: Down payment amount = $22,000 Down payment ratio = 11%

Q: Mortgages, loans taken to purchase a property, involve regular payments at fixed intervals and are…

A: A mortgage indicates the sum borrowed to meet a specific purpose. Generally, mortgages are taken to…

Q: suppose Tim is buying a new car. He agreed to a price of $21,000 and he has $3,500 for a down…

A: Price of car = $21,000 Down Payment = $3,500 Time Period = 6 Years Interest rate = 3.6%

Q: Can you please calculate the assumption part and find: 1) What will be the monthly payment of…

A: The monthly payment is the payment that is made by every month which includes the principal amount…

Q: hat happens to the interest if I pay more than my payment amount on a car or home loan? What happens…

A: The loans are paid by equal monthly payments that carry the payment for interest and payment for…

Q: A few years down the road you move out, buying your own home. You decide to take another look at…

A: The finance charge represents the total interest amount to be paid over the loan term. When a loan…

Q: Suppose a man took out a 30-year loan with an annual rate of 6% to put an addition on his house. His…

A: Data given: Cost of computer=$1200 n=30 year Rate=6% p.a.

Q: You want to buy a $214,000 home. You plan to pay 10% as a down payment, and take out a 30 year loan…

A: a) Mortgage amount = Cost of home - Down payment Monthly payments are calculated using excel PMT…

Q: Solve the problem with complete solution. 9. You plan to buy a house and lot through home loan from…

A: It is the percentage of payment of the selling price , to be paid in advance.

Q: Dan is planning to buy a new home that costs $130000 Find the following if Dan make a 5%…

A: The down payment is the initial payment made by the buyer when anything is bought on credit.

Q: What is the maximum price you can offer for a home in order to have enough money for the down…

A: Information Provided: Amount saved (down payment) = $18,000 Down Payment = 11%

Concept explainers

Calculating the Return On A Loan

Question

100%

You and your spouse have the following retirement accounts. Tell me how much you can take out or
borrow from each account without incurring a tax penalty. Assume that you are a first time home
buyer and you are in the 17% Federal and state tax brackets.
Your IRA $9,000
Your Spouse's IRA $8,000
Your Roth IRA $18,000 (10,000 of contributions)
Your Spouse's Roth $15,000 (8,500 of contributions)
Your 401(k) $110,000
Based on the information above, answer the following questions:
* number your answers 1,2,3
1) How much can you take out or borrow without penalty for a down payment?
2) What is the maximum amount you can pay for a house if you put 20% down. Assume that you
can borrow any amount.

Expert Solution

This question has been solved!

Explore an expertly crafted, step-by-step solution for a thorough understanding of key concepts.

This is a popular solution!

SEE SOLUTION Check out a sample Q&A here

Step 1

VIEW

Step 2

VIEW

Trending now

This is a popular solution!

Step by step

Solved in 2 steps

SEE SOLUTION Check out a sample Q&A here

Knowledge Booster

Learn more about

Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, accounting and related others by exploring similar questions and additional content below.

Similar questions

What is amortization? Describe other types of loan arrangements. If you could afford to pay cash for a home, is it worth it to take a mortgage out anyway? If no, why not. If yes, why. Here are the variables:30 year amortized mortgage at 5% fixedInvestment opportunity at 3.5% fixedPrice of the home is $500,000. You’ll either invest $400,000 and make a down payment on the house of $100,000 and mortgage the rest. Hint: Find out if the interest earned on the investment is more or less than the interest made on the investment.
You wish to buy a house for $170,000. You want to put down a down payment first, then mortgage the rest. How much would the down payment be and how much would the mortgage be for the following percentages? Answer to nearest whole dollar. a) 15% down payment b) mortgage loan amount after 15% down рayment c) 20% down payment d) mortgage loan amount after 20% down рayment
a purchaser makes a 20% down payment on a new home and obtains a loan for the balance. The lender charges two discount points which equals 1000. what was the sale price of the house? I would like a break down on how to obtain the answer
You want to buy a $188,000 home. You plan to pay 20% as a down payment, and take out a 30 year loan at 3.4% interest for the rest. a) How much is the loan amount going to be? $ b) What will your monthly payments be? $ c) How much total interest do you pay? $ d) Suppose you want to pay off the loan in 15 years rather than 30. What will your monthly payment be? $ e) How much money in interest will you save if you finance for 15 years instead of 30 years?
You want to buy a $205,000 home. You plan to pay 10% as a down payment, and take out a 30 year loan at 4.15% interest for the rest. a) How much is the loan amount going to be? b) What will your monthly payments be? c) How much of the first payment is interest?
Your friend is currently paying $734 in rent monthly in Fort Wayne and would rather apply the payment toward purchasing a home. If she can get a 30 year mortgage at 4.67% APR using her current payment amount, how much could she borrow? What could you type into Excel to calculate this value?
Mortgages, loans taken to purchase a property, involve regular payments at fixed intervals and are treated as reverse annuities. Mortgages are the reverse of annuities, because you get a lump-sum amount as a loan in the beginning, and then you make monthly payments to the lender. You’ve decided to buy a house that is valued at $1 million. You have $200,000 to use as a down payment on the house, and want to take out a mortgage for the remainder of the purchase price. Your bank has approved your $800,000 mortgage, and is offering a standard 30-year mortgage at a 9% fixed nominal interest rate (called the loan’s annual percentage rate or APR). Under this loan proposal, your mortgage payment will be per month. (Note: Round the final value of any interest rate used to four decimal places.) Your friends suggest that you take a 15-year mortgage, because a 30-year mortgage is too long and you will pay a lot of money on interest. If your bank approves a 15-year, $800,000 loan at…
Suppose you bought a condo for $100,000 financing it with a $20,000 down payment of your own funds and an $80,000 mortgage loan from a bank. Assume that the market value of your condo has now risen to $120,000. Ignoring interest and other costs, and assuming the loan amount is still $80,000, calculate your rate of return on your asset (ROA) and your rate of return on equity (ROE).
III. Assume compound interest is used to solve the following problems. 1. Stanley borrowed $4500.00 from his credit union to do some home renovations. The loan has an annual interest rate of 5.75% and an amortization period of 3 years. a. What is Stanley's monthly payment? b. Calculate the total amount he will pay over 3 years. G Calculate the finance charge on the loan. 2. Adele wants to buy a used car that costs $2900.00. She has $1100.00 saved up for a down payment. a. How much will Adele have to borrow to buy the car? b. She can get a loan at 6.50% per annum with an amortization period of 2 years. What will be her monthly payment? c. What will be the total she pays for the loan? d. How much will the car cost? 3. Calculate the monthly payment, the total amount paid, and the finance charge for the following loans: a $2000.00 at 8.00% per annum for 3 years; b. $10 000.00 at 6.25% per annum for 5 years; and c. $1500.00 at 3.75% per annum for 2 years. 4. Harley used her credit card to…
how much do you need if i have $40,000 in my bank and the bank pays 5.3% annual interest if i need $170,000 to buy a house?
4. Use the present value of an annuity formula to find the maximum car loan that you can afford if you can afford to pay $250 per month, the interest rate is 3%, and you want to have it paid off in 4 years? Assume monthly payments. Write out the formula first to show your work.
You want to buy a $162,000 home. You plan to pay 20% as a down payment, and take out a 30 year loan at 4.1% interest for the rest.a) How much is the loan amount going to be?b) What will your monthly payments be?c) How much of the first payment is interest?