10. The Yang family plans to buy a new house soon and is considering mortgage options. They are considering two options, a 15-year mortgage with an APR of 6.3% or a 30-year mortgage with an APR of 7.8%. Both options compound interest monthly. Currently the Yang family spends (e) $1,716 each month in rent and plan to spend the same amount on a mortgage payment. They do not currently have a down payment and will finance the full price of the home. Round answers to whole numbers. a. If the Yang family chooses the 15-year mortgage, how much will they be able to borrow? (3 pt) b. If the Yang family chooses the 30-year mortgage, how much will they be able to borrow? (3 pt) C. sentence. Which option will allow the Yang family to borrow the most? By how much? Respond in a complete (3 pt) d. Under which option will the Yang family spend the most overall? By how much? Respond in a complete (4 pt) sentence. I

10. The Yang family plans to buy a new house soon and is considering mortgage options. They are considering two options, a 15-year mortgage with an APR of 6.3% or a 30-year mortgage with an APR of 7.8%. Both options compound interest monthly. Currently the Yang family spends (e) $1,716 each month in rent and plan to spend the same amount on a mortgage payment. They do not currently have a down payment and will finance the full price of the home. Round answers to whole numbers. a. If the Yang family chooses the 15-year mortgage, how much will they be able to borrow? (3 pt) b. If the Yang family chooses the 30-year mortgage, how much will they be able to borrow? (3 pt) C. sentence. Which option will allow the Yang family to borrow the most? By how much? Respond in a complete (3 pt) d. Under which option will the Yang family spend the most overall? By how much? Respond in a complete (4 pt) sentence. I

Essentials Of Investments

11th Edition

ISBN:9781260013924

Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.

Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.

Chapter1: Investments: Background And Issues

Section: Chapter Questions

Problem 1PS

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Conor is comparing two potential housing options. Conor plans to stay in the home for 4 years, after which he plans to move again. Conor earns 12% annually on his other investments. He determines the following information about each option: OPTION 1: Purchase a home • Purchase a $270,000 home with a 30-year fixed mortgage • Loan amount = $270,000 (100% financing) • Annual mortgage interest rate = 6.00% Monthly mortgage payments = $1,618.79 • Additional monthly costs (insurance, taxes, maintenance) = $350.00 • Real estate growth rate = 5% annually .
A couple will retire in 30 years: they plan to spend about $30,000 a year (in real value) in retirement, which should last about 20 years. They believe that they can earn 6% nominal return on retirement portfolio account. The inflation rate over the next 50 years is expected to average 2%. a) What is the nominal value of the retirement fund the couple must have by the time they retire in 30 years to make it possible? b) How much do they need to save in nominal terms each year to create the retirement fund in part a)? c) If the couple successfully achieve their goal, what will be their nominal expenditures in the last year of retirement (year 50)?
Don't provide handwritten solution. A couple will retire in 40 years; they plan to spend about $31,000 a year (in current dollars) in retirement, which should last about 20 years. They believe that they can earn a real interest rate of 7% on retirement savings. If they make annual payments into a savings plan, how much will they need to save each year? Assume the first payment comes in 1 year. How would the answer to part (a) change if the couple also realize that in 15 years they will need to spend $61,000 on their child’s college education? USE EXCEL
Justin and Hayley are interested in a fixed-rate mortgage for $450,000. They are undecided whether to choose a 15- or 30-year mortgage. The current mortgage rate is 3.5% for the 15-year mortgage, and 3.85% for the 30-year mortgage (a) What are the monthly principal and interest payments for EACH loan? (b) What is the total amount of interest paid on EACH loan? (c) Overall, how much more interest is paid by choosing the 30-year mortgage?
. Josiah is considering using his lottery winnings of $900,000 to buy a house. He nust first pay off an existing debt of $300,000. The house is currently worth $700,000 and Josiah is willing to make a down payment of 35% of what is left of his lottery winnings, after he pays his debt of $300,000. He plans to apply for a 25 year mortgage at 5.0%, compounded monthly: a. What size mortgage would Josiah have to borrow to pay off the rest of his new house? b. Find the amount of his monthly mortgage payments c. Find the Total amount of Interest Josiah will pay to the bank, after 25 years.
Esme Reynolds is in her late 20s. She is renting an apartment for $1,700 a month. After much thought, she's seriously considering buying a condominium for $335,000. She intends to put 20 percent down and expects that closing costs will amount to another $11,000. A bank has agreed to lend her money at the fixed rate of 5 percent on a 15-year mortgage. Esme would have to pay an annual condominium owner's insurance premium of $680 and property taxes of $3,300 a year (she's now paying renter's insurance of $550 per year). In addition, she estimates that annual maintenance expenses will be about 0.5 percent of the price of the condo (which includes a $30 monthly fee to the property owners' association). Esme's income puts her in the 24 percent tax bracket (she does not itemize her deductions on her tax returns), and she earns an after-tax rate of return on her investments of around 4 percent. Assume that the standard deduction for a single person is $12,950. 1. Given the information…
Bill plans to buy a new house soon he’s considering two mortgage options. 15 year mortgage with a APR 2.75% or a 30 year mortgage with an APR of 3.14%. Both options are compound interest monthly. Bill currently spends $1,685 each month on rent he will like to spend the same on a mortgage. He doesn’t have a down payment and will finance the full price for the home. Round answer to whole numbers a. If Bill choose the 15 year mortgage how much doesn’t he need to borrow b. If Bill choose the 30 year mortgage how much doesn’t he need to borrow c. Which option will allow Bill go borrow the most. By how much d. Which option will Bill spend the most overall. By how much
A couple takes a second mortgage of $100,000 and promises to pay it back with accured interest 15 years from now. They are given the interest option of simple interest at 4.5% per annum. Is this a good option? Give the answer supported by calculations.
A family currently live in an apartment whose monthly rent is $950. They are thinking of buying a house which would cost $220,000. They plan to live in this house for 5 years and sell it at the end of the 5th year. They would put a downpayment of $20,000 and finance the balance through a mortgage at 3.5% interest rate. The mortgage is to be repaid in 5 annual installments (which include both principal and interest) at the end of each year for the next 5 years The house will have the following additional expenses: annual maintenance: $1500, Property taxes $5500, Insurance: $1200. Assume they are in tax bracket of 20% and the price of home, rent and expenditure increases by 2.5% per year. Their opportunity cost or required rate of return is 5% per year. Note that property taxes are tax deductible and there no tax payable on capital gains. Use annual compounding for amortization schedule of mortgage. Calculate Ownership Operating Advantage in year 4. O($40,230) (340,155) Ⓒ($39,350)…
Lyle considers himself a gambler. He likes to do research on individual stocks, market sectors, and stock market in general, and he likes to buy and sell based on breaking news. Lyle primarily invests in individual stocks and industry-specific mutual funds (i.e., healthcare mutual funds of manufacturing mutual funds). He rarely buys EFT's. What specific advantage of EFT's over mutual fund is Lyle missing out on? Diversified portfolio. Low expense ratios. Ability to buy and sell at anytime during the trading day. Both low expense ratios and the ability to buy and sell at anytime during the trading day.
Poppy is considering a $160,000$160,000 mortgage for 3030 years at a 4.6%4.6% interest rate. With this information, her monthly payment would be $820.23$820.23. If she only makes the minimum payment each month, what is the total payback of this loan? How much of this total payback is interest?
24) Jim and Nancy just got married today. They want to start saving so they can buy a house five years from today. The average house in their town today sells for $120,000. Housing prices are expected to increase 3 percent a year. When they buy their house five years from now, Jim and Nancy expect to get a 30-year (360-month) mortgage with a 7 percent nominal interest rate. They want the monthly payment on their mortgage to be $500 a month. Jim and Nancy want to buy an average house in their town. They are starting to save today for a down payment on the house. The down payment plus the mortgage will equal the expected price of the house. Their plan is to deposit $2,000 in a brokerage account today and then deposit a fixed amount at the end of each of the next five years. Assuming that the brokerage account has an annual return of 10 percent, how much do Jim and Nancy need to deposit at the end of each year in order to accomplish their goal?

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