9. You are going to buy your first house, you have saved $4,000 to put down and have been qualified for a 20 or 30 year loan at a rate of 4.5% interest. You are recently out of college and not making much money yet so you want to keep your monthly payment low. You can afford a monthly payment of $900. a. What price house could you afford if you did a 20 year loan? b. What price house could you afford if you did a 30 year loan? C. You decide to do the 30yer loan. After 10 years you sell your home for $220,000 and pay off the rest of the loan on your house how much money do you make?
9. You are going to buy your first house, you have saved $4,000 to put down and have been qualified for a 20 or 30 year loan at a rate of 4.5% interest. You are recently out of college and not making much money yet so you want to keep your monthly payment low. You can afford a monthly payment of $900. a. What price house could you afford if you did a 20 year loan? b. What price house could you afford if you did a 30 year loan? C. You decide to do the 30yer loan. After 10 years you sell your home for $220,000 and pay off the rest of the loan on your house how much money do you make?
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
Related questions
Question
Transcribed Image Text:Request edit access
SH
9. You are going to buy your first house, you have saved $4,000 to put down and
have been qualified for a 20 or 30 year loan at a rate of 4.5% interest. You are
recently out of college and not making much money yet so you want to keep
your monthly payment low. You can afford a monthly payment of $900.
a. What price house could you afford if you did a 20 year loan?
b. What price house could you afford if you did a 30 year loan?
c. You decide to do the 30yer loan. After 10 years you sell your home for
$220,000 and pay off the rest of the loan on your house how much
money
do
you make?
Expert Solution
Step 1
This is the question of present value of annuity.
where,
a = annuity
m = frequency of compounding in a period
n = no of period
r= rate
Step by step
Solved in 5 steps
Knowledge Booster
Learn more about
Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, finance and related others by exploring similar questions and additional content below.Recommended textbooks for you
Essentials Of Investments
Finance
ISBN:
9781260013924
Author:
Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher:
Mcgraw-hill Education,
Essentials Of Investments
Finance
ISBN:
9781260013924
Author:
Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher:
Mcgraw-hill Education,
Foundations Of Finance
Finance
ISBN:
9780134897264
Author:
KEOWN, Arthur J., Martin, John D., PETTY, J. William
Publisher:
Pearson,
Fundamentals of Financial Management (MindTap Cou…
Finance
ISBN:
9781337395250
Author:
Eugene F. Brigham, Joel F. Houston
Publisher:
Cengage Learning
Corporate Finance (The Mcgraw-hill/Irwin Series i…
Finance
ISBN:
9780077861759
Author:
Stephen A. Ross Franco Modigliani Professor of Financial Economics Professor, Randolph W Westerfield Robert R. Dockson Deans Chair in Bus. Admin., Jeffrey Jaffe, Bradford D Jordan Professor
Publisher:
McGraw-Hill Education