A borrower is purchasing a property for $1,800,000 and can choose between two possible loan alternatives. The first is a 75% loan for 25 years at 9% interest and 1 point and the second is an 80% loan for 25 years at 9.25% interest and 1 point. Assume the loan term will be 5 years. What is the incremental cost of borrowing the extra money?

A borrower is purchasing a property for $1,800,000 and can choose between two possible loan alternatives. The first is a 75% loan for 25 years at 9% interest and 1 point and the second is an 80% loan for 25 years at 9.25% interest and 1 point. Assume the loan term will be 5 years. What is the incremental cost of borrowing the extra money?

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 that you decide to borrow 13000 for a new car. You can select one of the following loans each requiring regular monthly payments. Installment loan A three-year loan at 5.9% Installment loan B five -year loan at 5.8% What would be the monthly payments for each loan and total interest for them also?
Suppose that you take out a 40-year $175000 mortgage with an APR of 6%. You make payments for 3 years and then you consider refinancing the original loan. The new loan would have a term of 15 years, have and APR of 5.7% and be in the amount of the unpaid balance on the original loan. The administrative cost of taking out the second loan would be $1700. What are the monthly payments on the original loan? What would the monthly payment of the second loan be? What would the total amount you would pay if you continued with the original 40-year loan without refinancing? What would the total amount would you pay with the refinancing?
You want to buy a $168,000 home. You plan to pay 5% as a down payment, and take out a 30 year loan at 6.95% interest for the rest. How much is the loan amount going to be? What will your monthly payments be?
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Suppose you take out a 50-year $250,000 mortgage with an APR of 6%. You make payments for 3 years (36 monthly payments) and then consider refinancing the original loan. The new loan would have a term of 20 years, have an APR of 5.8%, and be in the amount of the unpaid balance on the original loan. (The amount you borrow on the new loan would be used to pay off the balance on the original loan.) The administrative cost of taking out the second loan would be $1900. What are the monthly payments on the original loans ?(Round nearest to cent)
Suppose you are interested in taking an FHA mortgage loan for $250,000 in order to purchase your principal residence. In order to do so, you must pay an additional up-front mortgage insurance premium (UFMIP) of 1.0% of the mortgage balance. If the interest rate on the fully-amortizing mortgage loan is 5% and the term is 30 years and the UFMIP is financed (i.e., it is included in the loan amount), what is the dollar portion of your monthly mortgage payment that is designated to cover the UFMIP? A. $2,500.00B. $1,119.41C. $159.67D. $13.42
You want to buy a $150,000 home. You plan to pay 5% as a down payment, and take out a 30 year loan at 4.9% interest for the rest. The bank will charge 3 points on the amount financed. a) What is the amount of the down payment? b) How much is the loan amount going to be? c) What will be the amount charged for 3 points? *1 point is 1 % of the mortgage amount d) Find the amount of the monthly payment. (Do not add the cost of the points to the loan amount) Hint: click here Question Help: D Video Message instructor %24
You want to buy a $162,000 home. You plan to pay 20% as a down payment, and take out a 30 year loan at 4.1% interest for the rest.a) How much is the loan amount going to be?b) What will your monthly payments be?c) How much of the first payment is interest?
You need $15,000 to purchase a used car. Your wealthy uncle is willing to lend you the money as an amortized loan. He would like you to make annual payments for 4 years, with the first payment to be made one year from today. He requires a 8% annual return. What will be your annual loan payments? Round your answer to the nearest cent. Do not round intermediate calculations.
When purchasing a $100,000 house, a borrower is comparing two loan alternatives. The first loan is an 80% loan at 4% with monthly payments of $591.75 for 15 years. The second loan is 90% loan at 5% with monthly payments of $526.13 over 25 years. What is the incremental cost of borrowing the extra money assuming the loan will be held for the full term? O 6.50% O 13.21% O 7.20% O 13.70%
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