5. A sports mortgage is the brainchild of Stadium Capital Financing Group, a company headquartered in Chicago, Illinois. It is an innovative way to finance cash-strapped sports programs by allowing fans to sign up to pay a "mortgage" over a certain number of years for the right to buy good seats at football games for several decades with season ticket prices locked in. The locked-in price period is 50 years in California. Assume you and your brother went to UCLA. Your brother, Harold, purchases a $40,000 mortgage and pays for it now to get season tickets for $290 each for 50 years, while you, being a three-time alumnus of the same university, are able to buy season tickets at $390 in year 1, with prices increasing by $20 per year for 50 years. What should Harold have been willing to pay UCLA upfront for the mortgage to make the two plans exactly equivalent economically if the rate of interest is 8% per year? (Assume Harold has no reason to give extra money to UCLA at this point and that the seats are the same level and next to each other.)

5. A sports mortgage is the brainchild of Stadium Capital Financing Group, a company headquartered in Chicago, Illinois. It is an innovative way to finance cash-strapped sports programs by allowing fans to sign up to pay a "mortgage" over a certain number of years for the right to buy good seats at football games for several decades with season ticket prices locked in. The locked-in price period is 50 years in California. Assume you and your brother went to UCLA. Your brother, Harold, purchases a $40,000 mortgage and pays for it now to get season tickets for $290 each for 50 years, while you, being a three-time alumnus of the same university, are able to buy season tickets at $390 in year 1, with prices increasing by $20 per year for 50 years. What should Harold have been willing to pay UCLA upfront for the mortgage to make the two plans exactly equivalent economically if the rate of interest is 8% per year? (Assume Harold has no reason to give extra money to UCLA at this point and that the seats are the same level and next to each other.)

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

See similar textbooks

Similar questions

Allen plans to purchase a house in Lindfield this year, the selling price for the house is $3.8 million. Hewants to borrow 80% of the total capital from the bank using a principal and interest loan and pay 30-yearmonthly mortgage payments. CBA bank received his loan application and provided a valuation report basedon current market conditions. However, the bank valuation is conservative, stating the market value is only$3.5 million, and to lower the risk from the bank’s side, it only approves the loan with an LVR (Loan to ValueRatio) of 70% or less.Assuming that Allen wishes to borrow as much as possible from CBA bank, how much will his monthlypayments be for such a mortgage? The current interest rate from CBA is 3.19% P.A. Ignore other costs.
I need the answer of the question attached. Please provide all possible answers. Thank you!
15. Mortgage payments 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 $300,000 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 $700,000 mortgage, and is offering a standard 30-year mortgage at a 12% 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 in percentage form 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…
Ten years ago Jim took a mortgage loan of $200,000 to be repaid in 20 equal annual installments of $30,197.34. The bank has told him that they would accept $145,000 today as payment in full for the remainder of the loan. What is the balance on this loan? If we assume that Jim has the money, what interest rate must he earn on alternative investments in order not to accept the bank offer?
The board of directors of Yancey Company declared a cash dividend of $1.50 per share on 42,000 shares of common stock on July 15, 20X1. The dividend is to be paid on August 15, 20X1, to stockholders of record on July 31, 20X1. The correct entry to be recorded on August 15, 20X1, would be a. Dividends Payable 63,000 Cash 63,000 b. Cash Dividends 63,000 Cash 63,000 c. Cash 63,000 Paid-in Capital 63,000 d. Dividends Payable 63,000 Paid-in Capital 63,000
Hi there, I'm trying to solve this corporate finance problem without using excel. John has a 5 year mortgage contract on $332,100 amortized over 25 years at a rate of 5% per year compounded semiannually. At the end of the 5 year contract, the outstanding principal is $250,000. John's interest rate is still the same but he wishes to switch to weekly payments. How much will John's weekly payments be?
A sports mortgage is the brainchild of Stadium Capital Financing Group, a company headquartered in Chicago, Illinois. It is an innovative way to finance cash-strapped sports programs by allowing fans to sign up to pay a “mortgage” over a certain number of years for the right to buy good seats at football games for several decades with season ticket prices locked in. The locked-in price period is 50 years in California. Assume you and your brother went to UCLA. Your brother, Harold, purchases a $45,000 mortgage and pays for it now to get season tickets for $290 each for 50 years, while you, being a three-time alumnus of the same university, are able to buy season tickets at $390 in year 1, with prices increasing by $20 per year for 50 years. Which of you made the better deal at an interest rate of 8% per year? The present worth of Harold's investment is $− and the present worth of your investment is $−
You just won a lottery that promises to pay you $1 million exactly 10 years from today. Because the $1 million payment is guaranteed by the state in which you live, opportunities exist to sell the claim today for an immediate lump-sum cash payment. What is the least you will sell your claim for if you could earn 5.05 % on similar-risk investments during the 10-year period?
Five years ago, Diane secured a bank loan of $390,000 to help finance the purchase of a loft in the San Francisco Bay area. The term of the mortgage was 30 years, and the interest rate was 7%/year compounded monthly on the unpaid balance. Because the interest rate for a conventional 30-year home mortgage has now dropped to 5.5%/year compounded monthly, Diane is thinking of refinancing her property. (Round your answers to the nearest cent.) (a) What is Diane's current monthly mortgage payment? (b) What is Diane's current outstanding principal? (c) If Diane decides to refinance her property by securing a 30-year home mortgage loan in the amount of the current outstanding principal at the prevailing interest rate of 5.5%/year compounded monthly, what will be her monthly mortgage payment? (d) How much less will Diane's monthly mortgage payment be if she refinances?
You have saved $50,000 to use as a down payment for some property and to build a home. The home is in a prime building location that has trees and a stream running through the property. The clearing of the land and the building of the house will cost a total $650,000. a) How much money will you need to borrow through a mortgage for your home? b) The bank offers to finance your purchase with a 25-year amortized mortgage with a 5-year term at 4.125%. If you want to make monthly payments on this loan (end of each month), how much will each payment be? c) Prepare an amortization schedule for your first 3 mortgage payments d) At the end of the 5-year term, the mortgage terms allow you pay down an additional 10% of the original mortgage amount and the terms allow you to change the remaining amortization period. You have saved the additional money to pay down the amount of the loan (additional 10% of the original mortgage amount) and you want to shorten the remaining amortization by 5 years.…
Show Your Work Brian just purchased a home for $300,000 and made the required down payment of 20% ($60,000) to avoid PMI. Therefore, he is financing $240,000 over 30 years (360 months) at 3%. A) How much are his payments on the loan? B) His husband, Greg, is a great financial planner and says it would be very prudent to pay an EXTRA $200 per month on the mortgage payments. How many monthly payments will this “knock off” or reduce on the original 360 payments? How much interest will be saved over the life of the loan by making the extra $200 per month payment?