3. Suppose you are taking out a mortgage for $300,000, with an annual rate of interest of six percent. Mortgage payments are made and interest is compounded monthly. (A) What is the monthly mortgage payment for a 20-year mortgage? Hint: if you've forgotten how to do this, write down an equation that $300,000 equals the present value of the sum of 240 monthly payments. Let X be the monthly payment, and let r be the effective monthly interest rate. Then multiply the equation you have by 1/1+r to get another equation that you can subtract from the first one to simplify. (B) What nart of the first monthly navment is renavment of princinal?

3. Suppose you are taking out a mortgage for $300,000, with an annual rate of interest of six percent. Mortgage payments are made and interest is compounded monthly. (A) What is the monthly mortgage payment for a 20-year mortgage? Hint: if you've forgotten how to do this, write down an equation that $300,000 equals the present value of the sum of 240 monthly payments. Let X be the monthly payment, and let r be the effective monthly interest rate. Then multiply the equation you have by 1/1+r to get another equation that you can subtract from the first one to simplify. (B) What nart of the first monthly navment is renavment of princinal?

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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Suppose you have a $175,000 30-year mortgage with a 4.5% interest rate on the loan. a. Find the monthly payment.
You buy a house for $230000, and take out a 30-year mortgage at 6% interest. For simplicity, assume that interest compounds continuously. A) What will be your annual mortgage payment? $ per year %24
Differential Equations You buy a house for $380000 and you take out a 30-year mortgage at 7% interest. For simplicity, assume that interest compounds continuously. i) What will be your annual mortgage payment, P? ii) Suppose that regular wages at your job allow you to increase your annual payment by 3% each year. For simplicity, assume this is a nominal rate, and your payment amount increases continuously. How long will it take to pay off the mortgage?
If you could pay for your mortgage forever, how much would you have to pay per month for a $1,000,000 mortgage, at a 6.5% annual interest rate? Work out the answer (a) if the 6.5% is a bank APR quote and (b) if the 6.5% is a true effective annual rate of return.
Suppose your gross monthly income is $5,300 and your current monthly payments are $575. If the bank will allow you to pay up to 36% of gross monthly income (less current monthly payments) for a monthly house payment, what is the maximum loan you can obtain if the rate for a 30-year mortgage is 4.65%? (Round your answer to the nearest cent.)
Solve all three parts Q) Suppose you decide to take out the $1 million 30-year fixed rate mortgage at 4%. a) How much money will you pay in interest in the first month (units: dollars)? b) How much principle will you still have left to pay off after making your first 15 years worth of payments (units: thousands of dollars)? c) How much money money will you pay in interest in the 181st payment (units: dollars)?
Use the formulas presented in the lectures to CALCULATE the answers to the following items. Round the annuity factor to 4 decimal places and the mortgage payment to the penny. Suppose the current price of a home is $320,000. The amount of the loan is $ if the down payment is 10%. The annuity factor for a 30-year mortgage is if the mortgage rate is 7.2%. The mortgage payment is $ when a 10% down payment is made to purchase a $320,000 given and the mortgage rate is 7.2%.
Suppose you want to purchase a home for $525,000 with a 30-year mortgage at 4.84% interest. Suppose also that you can put down 30%. What are the monthly payments? (Round your answer to the nearest cent.) $ What is the total amount paid for principal and interest? (Round your answer to the nearest cent.) $ What is the amount saved if this home is financed for 15 years instead of for 30 years? (Round your answer to the nearest cent.)
The formula below tells us how to obtain the maturity value on a simple discount loan if we are given the proceeds, the discount rate, and the term. If a loan's annual simple discount rate is 7.56%, how many years would it take for the debt to double? (This is called the doubling time of a loan). Round your answer to the nearest tenth of a year. Hint: divide both sides of the equation by P. If M is twice as much as P, what should the fraction on the left-hand side equal?
<. Question 18 You can afford a $1200 per month mortgage payment. You've found a 30 year loan at 6% interest. a) How big of a loan can you afford? tor b) How much total money will you pay the loan company? c) How much of that money is interest? Calculator
Suppose your gross monthly income is $5,300 and your current monthly payments are $625. If the bank will allow you to pay up to 36% of gross monthly income (less current monthly payments) for a monthly house payment, what is the maximum loan you can obtain if the rate for a 30-year mortgage is 4.65%? (Round your answer to the nearest cent.)
A borrower is making a choice between a mortgage with monthly payments or biweekly payments. The loan will be $238,000 at 6 percent interest for 20 years. Required: a. hat would be the maturity period if payments are bi-weekly? How much will the borrower pay in total under each payment option? Which choice would be less costly to the borrower? Hint: Assume 26 total bi-weekly payments per year for the maturity period. b. Assume that the bi-weekly loan was available for 5.75%. What would be the maturity period if payments are bi-weekly? How much will the borrower pay in total under each payment option? Which choice would be less costly for the borrower? Complete this question by entering your answers in the tabs below. Required A Required B hat would be the maturity period if payments are bi-weekly? How much will the borrower pay in total option? Which choice would be less costly to the borrower? Hint: Assume 26 total bi-weekly payments maturity period. Note: (Do not round intermediate…

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