Assume you buy a house for $660,000 and have $132,000 as a down payment. Your mortgage rate is 3 percent APR compoundedsemi-annually and you amortize the mortgage over 25 years with monthly payments. You will assume that you could have earned 5percent EAR on the down payment (opportunity cost), your marginal income tax rate is 40 percent, real estate fees are 4 percent +HSTand property taxes will be $6,600 annually for this calculation. Ignore maintenance costs.a. What is the true return on your investment if you sell it in 6 years for $1,040,000? (Do not round your intermediate calculations.Round your answer to 2 decimal places. Omit the "%" sign in your response.)Return on Investment%b. What is an approximate annualized rate of return on your investment? (Do not round your intermediate calculations. Round youranswer to 3 decimal places. Omit the "%" sign in your response.)Annualized Rate of Return%

Mortgage Payment Calculation:- The formula to calculate the monthly mortgage payment (M)…

Answered: Assume you buy a house for $660,000 and…

EBK CONTEMPORARY FINANCIAL MANAGEMENT

14th Edition

ISBN:9781337514835

Author:MOYER

Publisher:MOYER

Chapter5: The Time Value Of Money

Section: Chapter Questions

Problem 15P

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Let's say that you are planning to purchase a house. You have $32,000 set aside as a down payment towards teh purchase price of the house, and you are looking at a 20 year loan at 6.12% interest compounded monthly. Your financial planner has advised you that your mortgage payments for the year should not exceed 20% of your take-home pay. If your yearly take-home pay is $24,000, then find the maximum price of the house that you could purchase (while following the advice of your financial planner). Do not use TVM solver.
you wish to purchase real property. the lender will give you a 250000 fixed rate 30 year mortgage at 3.5% per annum. suppose that before you can make any payments you receive a pay raise so you can pay an extra 200 per month with your normal payment. how many payments are required to fully amortize the loan assuming the extra 200 is paid each month?
You want to buy a $151,000 home. You plan to pay 5% as a down payment, and take out a 30 year loan at 6.25% interest for the rest. a) How much is the loan amount going to be? LA $ b) What will your monthly payments be? LA c) How much of the first payment is interest? LA
You want to purchase a house valued at $200,000. After a downpayment, you can finance the house with a 20 year mortgage at 4.2% APR, compounded monthly. What percentage of the house will you need to finance in order to have monthly payments of $1,000? Round to two decimal places. What is the downpayment?
You want to buy a house valued at $200,000. AFter a down payment, you can finance the house with a 20 year mortgage at 4.2% APR compounded monthly. If you have a monthly payment of $1000, how much of the second payment goes towards the blance on the loan?
You want to buy a $214,000 home. You plan to pay 10% as a down payment, and take out a 30 year loan at 5.6% 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?
Suppose you take out a $117,000, 20-year mortgage loan to buy a condo. The interest rate on the loan is 5%. To keep things simple, we will assume you make payments on the loan annually at the end of each year. a. What is your annual payment on the loan? b. Construct a mortgage amortization. c. What fraction of your initial loan payment is interest? d. What fraction of your initial loan payment is amortization? e. What is the total of the loan amount paid off after 10 years (halfway through the life of the loan)? f. If the inflation rate is 3%, what is the real value of the first (year-end) payment? g. If the inflation rate is 3%, what is the real value of the last (year-end) payment? h. Now assume the inflation rate is 6% and the real interest rate on the loan is unchanged. What must be the new nominal interest rate? i-1. Recompute the amortization table. i-2. What is the real value of the first (year-end) payment in this high-inflation scenario? j. What is the real value of the last…
You decide to buy a house costing $6,000,000. You pay $1,000,000 down, and the remainder will be paid in monthly installments over 25 years at 3.9% compounded monthly. a) What is the monthly payment? b) What is the outstanding balance after making the 100 th payment? c) What is the equity after making the 100 th payment? d) How much of the 100 th payment will go to principal and how much to interest? e) How much interest will paid over the entire length of the loan?
Suppose that you wish to buy a new home that will cost you $452,847. You must put $80,000 down, and the bank offers you a 5-year 5.1% APR negative amortization loan with a payments $1,258 per month, and a balloon payment of $92,233 (your 360th payment). How much will your remaining payments be?
You are buying your first house for $220,000 and are paying $30,000 as a down payment. You have arranged a 30-year mortgage loan with a 7% nominal interest rate and monthly payments. What are the equal monthly payments you must make?
Suppose you want to purchase a home for $425,000 with a 30-year mortgage at 5.74% interest. Suppose also that you can put down 30%. What are the monthly payments? (Round your answer to the nearest cent.)$ What is the total amount paid for principal and interest together? (Round your answer to the nearest cent.)$ What is the amount saved if this home is financed for 15 years instead of for 30 years? (Round your answer to the nearest cent.)$
You want to buy a $226,000 home. You plan to pay 5% as a down payment, and take out a 30-year loan at 6.55% 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?

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