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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Concept explainers
Question
The total monthly payment for a home mortgage loan is
affected by the property tax and insurance. This amount is
around 15% of the principal plus interest payment that you
calculated in the previous problem. Moreover, as a rule of
thumb, a family should not devote more than 28% of its
gross income for home loan payments. With this information,
find the amount that a family must earn to afford a
$200,000 mortgage loan using the APRs of the previous
problem.
Transcribed Image Text:A
B
C
D
E
Minimum
Total
Annual
Annual
Рayment
Рayment
(12 x
Income
APR Monthly (1.15 x
(%)
(Column D/
Payment Column B) Column C) 0.28)
4
8
12
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