A couple buying a new house wants to decidebetween two types of loans with differentmaturities. 20 in first credit 12,000 TL at the end ofeach year throughout the year, and 7,000 TL at theend of each year for 30 years in the second loan.This couple will calculate the current values of theloans to understand which loan is better. They aretrying to calculate. The interest rate (f') they use inthe calculation is 2%. Present value of loansCalculate and indicate which loan is more suitable.

Step 1: Let's calculate the present value of both loans: Step 2: Loan 1: PMT=12,000 TL per…

Answered: A couple buying a new house wants to…

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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Similar questions

The Allen's want to purchase a house. They can afford $1,025 a month for 20 years and a $23,000 down payment. They finance the loan with an APR of 5.23% mortgage rate for 20 years. Determine the amount of the Allen's loan using TVM Solver on calculator. N= I%= PV= PMT= FV= P/Y= C/Y=
Solve a. b. c. d. and e. step by step using excel or a financial calculator, please show steps to get the answer. Maria bought a house with price of $250,000. Her LTV (loan-to-value ratio) is 80%. She chooses the 30-year mortgage with interest rate 6%. Assuming the total origination cost is $10,000. a. What is Maria's loan amount? What is her monthly payment? What will be the loan balance at the end of nine years? b. What is the effective borrowing cost if the loan will be prepaid at the end of nine years? c. In the monthly payment, how much does Maria pay for the principle and how much does Maria pay for the interest in the 1st and the 2nd month? d. What will be Maria's interest payments for the first 5 years (year 1 to year 5) and the last 5 years (year 26 to year 30)? e. What is Maria's annual percentage rate (APR)?
A couple take a 30-year home mortgage of $120,000 at 7.8% compounded monthly. They make their regular monthly payments for 5 years, then decide to pay $1000 per month. a. Find their regular monthly payment. b. Findtheunpaidbalancewhentheybeginpayingthe$1000. c. How many payments of $1000 will it take to pay off the loan? Give the answer correct to one decimal place. d. Use your answer to part(c)to find how much interest they save by paying the loan this way.
A friend asks to borrow $48 from you and return will pay you $51 in one year. If your bank is offering a 6.5% interest rate on deposits and loans: a. How much would you have in one year if you deposited the $48 instead? b. How much money could you borrow today if you pay the bank $51 in one year? c. Should you loan the money to your friend or deposit it in the bank? D
A few years down the road you have moved out, buying your own home. You decide to take another look at your finances. Your outstanding loan of $275 per month only has 8 payments left on it (out of the original 60) with an interest rate of 11.75%. a. What is the finance charge “f”? b. What is the unearned interest “u”? c. How much would it cost to pay it off on payment #53?
Your parents shop around and a different bank is willing to lend them a $750,000 30-year mortgage with payments of $4,865 per month. What is the implied APR of this loan?
Answer the following question using a spreadsheet and the material in the appendix. You would like to buy a house. Assume that given your income, you can afford to pay $12,000 a year to a lender for the next 30 years. If the interest rate is 7% how much can you borrow today based on your ability to pay? What about if the interest rate is 3%? Maximum mortgage at 7%: $ Maximum mortgage at 3%: $
A few years ago a couple purchased an office space by financing RA for n years, paying periodic installment of Rp with an interest of r% compounded bimonthly (every 2 months). They have made t payments and wish to know how much they owe on the mortgage at the end of t payments, which they are considering paying off with an inheritance they received. 1. Construct a mathematical model to illustrate the value owed on the loan after t payments. 2. Give an explicit formula for computing the current balance on the loan account after n periods. 3. If the couple signed the contract by financing R80000 for 10 years, paying periodic installments of R1880 with an interest of 18% compounded binmonthly. What is the current value on the mortgage after 6 months?
Your classmate tells you the details of the great deal he got on his mortgage: 30-year 1.1% fixed rate with a 20% down payment a.)If his new home costs $136,000, what is his down payment? b.)How much is he going to borrow to buy the house (assuming he only has the money to make the down payment from the previous part)? c.)Use Excel’s PMT function to determine how much his monthly payments would be. d.)How much will he pay in interest over the lifetime of this mortgage?
A man plans to take a vacation in 4 years. He wants to buy a certificate of deposit for $1200 that he will cash in for the trip. What is the minimum annual interest rate he must obtain on the certificate if he needs at least $1700 for the trip? Assume that the interest on the loan is computed using simple interest The rate he must obtain is ___%
it For pre nments Unit Activity: Credit Cards and Large Purchases Buying a House Bethany and Samuel are buying a new house. They have $25,000 saved for a down payment and know that they can afford a monthly payment of $1,500 or less. They also know that the best interest rate they can get is 5.1% annually and they want to sign a 30-year mortgage. Part A If 5.1% is the annual interest rate, what is the monthly interest rate? BI U X² X₂ V 田 15px- Space used (includes formatting): 0/ 15000 V V Part B If they sign a 30-year mortgage, how many monthly payments will they make? BIUX² X₂ 15px M くく EEEEE 6 of 7 E Dec 1 1:56 Save & Exit
A friend asks to borrow $45 from you and in return will pay you $48 in one year. If your bank is offering a 5.7% interest rate on deposits and loans: a. How much would you have in one year if you deposited the $45 instead? b. How much money could you borrow today if you pay the bank $48 in one year? c. Should you loan the money to your friend or deposit it in the bank? a. How much would you have in one year if you deposited the $45 instead? If you deposit the money in the bank today you will have in one year. (Round to the nearest cent.) b. How much money could you borrow today if you pay the bank $48 in one year? You will be able to borrow $ today. (Round to the nearest cent.) c. Should you loan the money to your friend or deposit it in the bank? (Select from the drop-down menu.) From a financial perspective, you should as it will result in more money for you at the end of the year.

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