6. Loan Amortization Assume that your aunt sold her house on December 31, and to help close the sale she took a second mortgage in the amount of $30,000 as part of the payment. The mortgage has a quoted (or nominal) interest rate of 12%; it calls for payments every 6 months, beginning on June 30, and is to be amortized over 10 years. Now, 1 year later, your aunt must inform the IRS and the person who bought the house about the interest that was included in the two payments made during the year. (This interest will be income to your aunt and a deduction to the buyer of the house.) To the closest cent, what is the total amount of interest that was paid during the first year? Do not round intermediate calculations. Round your answer to the nearest cent. $

6. Loan Amortization Assume that your aunt sold her house on December 31, and to help close the sale she took a second mortgage in the amount of $30,000 as part of the payment. The mortgage has a quoted (or nominal) interest rate of 12%; it calls for payments every 6 months, beginning on June 30, and is to be amortized over 10 years. Now, 1 year later, your aunt must inform the IRS and the person who bought the house about the interest that was included in the two payments made during the year. (This interest will be income to your aunt and a deduction to the buyer of the house.) To the closest cent, what is the total amount of interest that was paid during the first year? Do not round intermediate calculations. Round your answer to the nearest cent. $

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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The Simpsons are moving into their new home. They purchased it for $250,000 by putting a down payment of $120,000 towards the purchase and paying the balance with a $130,000 mortgage amortized over 20 years at 6.75% per annum ( for a 3-year term). At the end of the 3-year term, the interest rate increased by 0.5%. What is the approximate increase in their monthly payment?
An appraiser is looking for comparable sales and finds a property that recently sold for $224, 000. She finds that the buyer was able to assume the seller's fully amortizing mortgage, which had monthly payments based on a 7 percent interest. The balance of the loan at the time of sale was $148, 000 with a remaining term of 15 years (monthly payments). The appraiser determines that if a $148, 000 loan was obtained on the same property, monthly payments at the market rate for a 15-year fully amortizing loan would have been 8 percent with no points. Required: a. Assume that the buyer is expected to benefit from the interest savings on the assumable loan for the entire loan term. What is the cash equivalent value of the property? b. What is the cash equivalent value of the property if you assumed that the buyer is only expected to benefit from interest savings for five years because he would probably sell or refinance after five years? Use excel spreadsheet to show work and provideanswer.
Ted is an investor and has purchased an IIP for the original price of $984.31767830979. For your convenience, the original information regarding IIP's has been repeated below. Customers pay $984.31767830979 to buy an IIP. The IIP will pay out $37 at the end of each year for 12 years The IIP will pay out a further single payment of $1,000 after 12 years There are no further payments after this single payment at time 12. a. Suppose Ted holds on to the IIP for the full 12 years. Ignoring time value of money, what is the profit he receives on an IIP? (This can be regarded as profit for tax purposes).
Juni buys a new car. Her auto loan is $12,000 with an annual interest rate of 3% compounded monthly for 5 years. Her monthly payment is $287 The following table shows the first payment in the amortization schedule. Payment number Loan Amount Payment Interest Principal Remaining Balance 1 12,000 287 ? ? ? Interest: $30 Interest: $8.61 Principal: $278.39 Principal: $257 Remaining Balance: $11,743 Remaining Balance: $ 11,721.61
Five years ago, Ms. Halliday received a mortgage loan from the Bank of Money for $60,000 at 7.8% compounded semiannually for a five-year term. Monthly payments were based on a 25-year amortization. The bank is agreeable to renewing the loan for another five-year term at 6.8% compounded semiannually. Calculate the principal reduction that will occur in the second five-year term if:a) The payments are recalculated based on the new interest rate and a continuation of the original 25-year amortization. b) Ms. Halliday continues to make the same payments as she made for the first five years (resulting in a reduction of the amortization period).
Erin has a mortgage of $640,000 through the Tangerine Bank for a vacation property. The mortgage is repaid by end of month payments with an interest rate of 5.3% compounded monthly for a term of 5 years, amortized over 25 years. At the end of the 5-year term, Erin will renew the mortgage for another 5-year term at a new, lower interest rate of 4.4% compounded monthly. Round ALL answers to two decimal places if necessary. 1) What are the end of month payments before the renewal of the mortgage? P/Y = I/Y = P1 = % P/Y = 2) What is the balance when the mortgage is renewed? I/Y = C/Y = PV = $ % PMT = $ (enter the rounded value into the calculator) P2 = 3) What will be the new end of month payments after the mortgage is renewed? C/Y = PV = $ N = PMT = $ FV = $ BAL= $ a positive value. N = FV = $ Enter
Robert has a mortgage of $326,000 through his bank for property purchased. The loan is repaid by end of month payments of $2,099.57 with an interest rate of 4.71% compounded monthly over 20 years. What is the interest paid in the 11th year of the mortgage?Interest paid in 11th year
In year 1, Abby purchased a new home for $200,000 by making a down payment of $150,000 and financing the remaining $50,000 with a loan, secured by the residence, at 6 percent. As of January 1, year 4 the outstanding balance on the loan was $40,000. On January 1, year 4, when her home was worth $300,000, Abby refinanced the home by taking out a $120,000 mortgage at 5 percent. With the loan proceeds, she paid off the $40,000 balance of the existing mortgage and used the remaining $80,000 for purposes unrelated to the home. During year 4, she made interest-only payments on the new loan of $6,000. What amount of the $6,000 interest expense on the new loan can Abby deduct in year 4 on the new mortgage as home-related interest expense?
Subject;
A husband and wife buy a new home and take out a $100000 mortgage loan with level annual payments at the end of each year for 15 years on which the effective rate of interest is equal to 5.5%. At the end of 5 years they decide to make a major addition to the house and want to borrow an additional $70000 to finance the new construction. They also wish to lengthen the overall length of the loan by 8 years (i.e. until 23 years after the date of the original loan). In the negotiations the lender agrees to these modifications, but only if the effective interest rate for the remainder of the loan after the first 5 years s raised to 6.5%. Find the revised annual payment which would result for the remainder of the loan. ANSWER = $

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