Jenny and Leo plan to purchase a new house and the couple is able to obtain a 25-year 3.6% (perannum, compounded monthly) amortised loan but they must put down 20% deposit. The loan requiresend-of-month repayments of $2,500 where the first payment is due a month after the loan is taken.Assuming that the couple has enough savings for the down payment, what is the cost of the house thatthey want to purchase?a. 494,068.50b. 2,470,342.49c. 750,000Od. 617,585.62

The concept of time value of money will be applied here. The cost of the house will be the sum of…

Answered: Jenny and Leo plan to purchase a new…

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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Lastly, Hector wants to invest in a certificate of deposit (CD) to purchase a boat that costs $28,500 when he retires. Leaf Investments offers a CD with 13% compounded semiannually. How much would Hector have to put in the CD today to gain $28,500 in 30 years?
The McBertys have "$20, 000" in savings to use as a down payment on a new home. They also have determined that they can afford between "$1, 600 and $1,900" per month for mortgage payments. If the mortgage rates are 11% per year compounded monthly, what is the price range for houses they should consider for a 30 - year loan?
Jamie and Edith plan to marry in 1 year, but they are worried about the cost of putting on a wedding. They have $30,000 in a savings account that earns 2% APR (compounded monthly). The couple plans on purchasing wedding insurance in 6 months; the cost of insurance is $6,000. How expensive of a wedding can the couple afford? You may assume that the couple uses their savings account to pay for the wedding in 1 year, net the insurance cost that occurs in 6 months. Report your answer without the $ please. Answer:
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Paul and Paula are purchasing a home for a price of $500,000. To avoid paying mortgage insurance, they will make a down payment of 20% of the price or $100,000. They will finance the remaining $400,000 with a 30-year, monthly payment, amortized mortgage at a fixed 7.2% nominal interest rate, with the first payment due in one month. What will the size of their monthly payment be?
Joe wants to own a home in the future. He asks you describe an advantages and disadvantage of a FRM versus an ARM. He then asks you to describe the advantages and disadvantages of a 15-year loan versus a 30-year loan. He also wants to know how the portion of the home payment that comprises interest changes over the years assuming he takes out an FRM. Is there anything he can do to reduce the total amount he’ll pay for the home? What else would be added to his monthly mortgage payment? What are three benefits of home ownership? What are three benefits of renting?
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A husband and wife buy a new home and take out a $100000 mortgage loan with level annual payments at the end of each year for 15 years on which the effective rate of interest is equal to 5.5%. At the end of 5 years they decide to make a major addition to the house and want to borrow an additional $70000 to finance the new construction. They also wish to lengthen the overall length of the loan by 8 years (i.e. until 23 years after the date of the original loan). In the negotiations the lender agrees to these modifications, but only if the effective interest rate for the remainder of the loan after the first 5 years s raised to 6.5%. Find the revised annual payment which would result for the remainder of the loan. ANSWER = $

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