A family currently live in an apartment whose monthly rent is $950. They are thinking of buying a house which would cost $220,000. They plan to live in this house for 5 years and sell it at the end of the 5th year. They would put a downpayment of $20,000 and finance the balance through a mortgage at 3.5% interest rate. The mortgage is to be repaid in 5 annual installments (which include both principal and interest) at the end of each year for the next 5 years The house will have the following additional expenses annual maintenance: $1500, Property taxes $5500, Insurance $1200. Assume they are in tax bracket of 20% and the price of home, rent and expenditure increases by 2.5% per year. Their opportunity cost or required rate of return is 5% per year. Note that property taxes are tax deductible and there no tax payable on capital gains. Use annual compounding for amortization schedule of mortgage. Calculate Ownership Operating Advantage in year 4 O($40,230) (340,155) Ⓒ($39,350) Ⓒ($39,631)

A family currently live in an apartment whose monthly rent is $950. They are thinking of buying a house which would cost $220,000. They plan to live in this house for 5 years and sell it at the end of the 5th year. They would put a downpayment of $20,000 and finance the balance through a mortgage at 3.5% interest rate. The mortgage is to be repaid in 5 annual installments (which include both principal and interest) at the end of each year for the next 5 years The house will have the following additional expenses annual maintenance: $1500, Property taxes $5500, Insurance $1200. Assume they are in tax bracket of 20% and the price of home, rent and expenditure increases by 2.5% per year. Their opportunity cost or required rate of return is 5% per year. Note that property taxes are tax deductible and there no tax payable on capital gains. Use annual compounding for amortization schedule of mortgage. Calculate Ownership Operating Advantage in year 4 O($40,230) (340,155) Ⓒ($39,350) Ⓒ($39,631)

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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Your credit score is in the range of 720-739 and you want to buy a house in Davis (CA). You have a 20% down payment to put on a house that has a market value of $450,000. If APR = 4.173% for your 30-year fixed mortgage, accordingly calculate your annual payment.
You have decided to become a homeowner with the purchase of a condominium in a newly redeveloped part of town. The condo costs $300,000 and you have a down payment of $90,000, so you will be carrying a mortgage of $210,000. If you take on a 5-year mortgage with a 25-year amortization period at a rate of 4.5% (compounded semiannually), with monthly payments, determine the following: a. Your monthly payment. b. The total interest and total principal paid over the first 5 years.
suppose you are buying your first condo for 145,000 and you will make $15,000 down payment. you have arranged to finnace the remainder with a 30 year monthly payment amortized mortgage at a 55 nominal interest rate with first payment due in one month what will your monthly payments be? how much of first month payment is the prindipal
A family currently live in an apartment whose monthly rent is $950. They are thinking of buying a house which would cost $220,000. They plan to live in this house for 5 years and sell it at the end of the 5th year. They would put a downpayment of $20,000 and finance the balance through a mortgage at 3.5% interest rate. The mortgage is to be repaid in 5 annual installments (which include both principal and interest) at the end of each year for the next 5 years The house will have the following additional expenses: annual maintenance: $1500, Property taxes:$5500, Insurance: $1200 Assume they are in tax bracket of 20% and the price of home, rent and expenditure increases by 2.5% per year. Their opportunity cost ar required rate of return is 5% per year. Note that property taxes are tax deductible and there no tax payable on capital gains. Use annual compounding for amortization schedule of mortgage. Calculate the rent saved during year 2. $12,583 $11,685 $11,977 $12,276
if your bank approves a $300,000 mortagage for your new home, at an annual percentage rate of 4.5 % and with a monthly payment of $1800 What will be the remaining mortgage amount after you make 4 monthly payments
A family currently live in an apartment whose monthly rent is $950. They are thinking of buying a house which would cost $220,000. They plan to live in this house for 5 years and sell it at the end of the 5th year. They would put a downpayment of $20,000 and finance the balance through a mortgage at 3.5% interest rate. The mortgage is to be repaid in 5 annual installments (which include both principal and interest) at the end of each year for the next 5 years The house will have the following additional expenses: annual maintenance: $1500; Property taxes:$5500; Insurance: $1200. Assume they are in tax bracket of 20% and the price of home, rent and expenditure increases by 2.5% per year. Their opportunity cost or required rate of return is 5% per year. Note that property taxes are tax deductible and there no tax payable on capital gains. Use annual compounding for amortization schedule of mortgage. Calculate Ownership Operating Advantage in year 1. ($39,596) ($39,924) ($39,350)…
You want to buy a condo in that costs 914 700 and have accumulated a 25% down payment. The remainder is financed with a 20year mortgage over 4 a year term which you have negotiated with a local financial institution. As you are a high risk borrower the best rate you can get is an APR of 7.6% compounded semi- annually with month end payments. How much would you owe the mortgage after your 48 mortgage payment?
If you are a mortgage lender, what is the most you are willing to lend a borrower today in the following situation: The borrower has promised to pay you $10,500 at the end of each year for 30 years and you want to earn a 5% annual rate of return. Amount the lender is willing to lend:
We suggest the use of a spreadsheet to create the amortization tables. You take out a 30-year mortgage for $80,000 at 9.25%, to be paid off monthly. Construct an amortization table showing how much you will pay in interest each year for the first 15 years and how much goes toward paying off the principal. If you sell your house after 15 years, how much will you still owe on the mortgage according to the amortization table? HINT [See Example 8.] (Round your answer to the nearest cent.) $
Marie and Danny Would like to buy a house for $220,000. The down payment for the mortgage is 30% of the price of the house. To earn the down payment, they invest $2500 a quarter at 6.2% compounded quarterly. They take a 30-year home mortgage for the rest of the price of the house at 7.3% compounded monthly. They make their regular monthly payments for 5 years, then decide to pay $2000 per month. How much is the down payment? How long will it take Marie and Danny to earn the down payment if they invest $2500 a quarter at 6.2% compounded quarterly? How much is the loan for the mortgage? What is the regular monthly payment? What is the unpaid balance when they begin paying the $2000? How many payments of $2000 will it take to pay off the loan? Give the answer correct to wo decimal places. How much interest will they save by paying the loan this way? Use your answer from #6 to find.
You are considering buying a new house, and have found that a $250,000, 30-year fixed-rate mortgage is available with an interest rate of 8 percent. This mortgage requires 360 monthly payments of approximately $1,786 each. If the interest rate rises to 9 percent, what will happen to your monthly payment?
You purchase a house for $1.3 million and take a mortgage for $1.05 million which will be amortized over 30 years. Your mortgage interest rate is fixed at 6% compounded monthly for a 5-year term and you will be making monthly payments. How much do you still owe at the end of the 5-year term (within $1000)? Use the method that calculates your mortgage balance based on the payments you have already made (as opposed to the payments you have remaining). OPPO A79 5G Rathod Kishan

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