Kobe has a mortgage for $798,337.00. The term of the mortgage is 4 years, and the amortization period is 25 years. Kobe will make monthly payments and the mortgage rate is r(²) = 4.000%. After 2 years, the interest rate drops to 3.250% compounded semi-annually, and he decides to refinance his loan. In order to refinance, she has to pay a penalty of 3 months interest (based on the original interest rate), which is added to the outstanding balance on the new mortgage. a) What is the outstanding balance at the time Kobe decides to refinance (not including the penalty)? $ b) What is the amount of the penalty? $ c) The new mortgage has is for the outstanding balance plus the penalty. The term is 2 years, and the amortization period is 23 years. What are the the new monthly payments? $

Kobe has a mortgage for $798,337.00. The term of the mortgage is 4 years, and the amortization period is 25 years. Kobe will make monthly payments and the mortgage rate is r(²) = 4.000%. After 2 years, the interest rate drops to 3.250% compounded semi-annually, and he decides to refinance his loan. In order to refinance, she has to pay a penalty of 3 months interest (based on the original interest rate), which is added to the outstanding balance on the new mortgage. a) What is the outstanding balance at the time Kobe decides to refinance (not including the penalty)? $ b) What is the amount of the penalty? $ c) The new mortgage has is for the outstanding balance plus the penalty. The term is 2 years, and the amortization period is 23 years. What are the the new monthly payments? $

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

Miguel buys a car costing $14,000. He agrees to make payments at the end of each monthly period for 4 years. He pays 7% interest, compounded monthly. (a) What is the amount of each payment?(b) Find the total amount of interest Miguel will pay.
Emma plans to loan $1,000 to her friend, who will pay a simple interest rate of 5.8% every year for the loan. If no payments are made and no further borrowing occurs between them for 13 years, then how much money will Emma' s friend owe her? $1,061.36 $1,754.00 $2,081.20 $158.00 Now, assume that Emma's friend volunteers to pay compound interest instead of simple interest for her loan. If interest is accrued at 5.8% compounded annually, all other things being equal, how much money will Emma's friend owe her in 13 years? $2,081.20 $1,058.00 $120.71 $ 1,754.00 Emma has another investment option in the market that pays 5.8% nominal interest, but it's compounded quarterly. Keeping everything else constant, how much money will Emma have in 13 years if she invests $1,000 in this fund? $158.00 $129.72 $2,114.01 $1,059.27
Donna wants to buy a house for $900,000.00. She makes a 15% down payment and borrows the rest by getting a 30-year mortgage. Her monthly mortgage payment is $3,803.75. What is the principal of her mortgage? What is the total she will pay on the loan?
Bob has lost his job and had to move back in with his mother. She agreed to let Bob have his old room back on the condition that he pay her $250 rent per month, and an additional $1500 every other year to pay for her biannual jaunt to Florida. Since he is down on his luck, she will allow him to pay his rent at the end of the year. If inflation is 3% and Bob’s interest rate is 5%, how much is the present cost (in Year-1 dollars) for a 5-year contract with mom? (Note: Mom’s trips are in Years 2 and 4).
Pat bought a home for $165,000 and made a $25,000 down payment. She got a fixed rate mortgage at 5% for 30 years. What will her payments be? What is the total interest over the life of the loan?
Aziz is planning to attend college when she graduates from high school four years from now. She has made an arrangement with her father to do the household chores if her dad deposits R3570,00 at the end of every six months for the next four years into a bank account. The account pays 8,5% interest per annum, compounded semi-annually. Her father pays and additional R5550,00 into the account for every R3570,00 deposit he makes. The first deposit will be made six months from now. How much money will there be in the account for Aziz to pay for her college expenses?
Williams buys GH¢5000 worth of home furnishings from AGC Furniture. He pays GH¢500 down and agrees to pay the balance in monthly installments over 5 years at j12 = 18%. The contract stipulates a penalty in case of earlyrepayment, equal to 3 months’ payments. After 2 years, Williams realizes he can borrow from the bank at j12 = 12%. Should he refinance?
David obtained a fully amortizing loan 8 years ago for $12,0000 at 8% for 30 years. Mortgage rates have dropped in such a manner so as to provide a loan for 22 years at 6.5%. There is no prepayment penalty on the mortgage balance of the original loan, but 2 points will be charged on the new loan and other closing cost will be $3000. All payments are monthly. How much does David need to borrow if he decides to borrow only outstanding loan balance? Is refinancing a good option if David decides to repay the full amount of loan in 5 more years? How would your answer for part 2a change if David decides to borrow outstanding loan balance and other refinancing costs? Would your answer for part 2b change if David decides to keep the loan for full term of the loan?
While buying a new car, Ryan made a down payment of $1,200 and agreed to make month-end payments of $320 for the next 3 years and 6 months. She was charged an interest rate of 4% compounded semi-annually for the entire term. a. What was the purchase price of the car? b. What was the total amount of interest paid over the term? Since the birth of her daughter, 18 years ago, Jeremy has deposited $150.00 at the beginning of every month into an RESP. The interest rate on the plan was 3.00% compounded monthly for the first 9 years and 3.60% compounded monthly for the next 9 years. a. Calculate the value of the fund today (the end of 18year term b. How much of this is interest?
Jack borrows $29,217 to pay for a car. The loan carries an annual rate of 4.8% and he wants to be debt free in 6 years by making biweekly payments (26 per year). How much interest will he pay on this loan?
Jack Bond plans to move into a rented flat in Melville in 8 month’s time. The owner of the flat, Ms Moneypenny, requires a deposit of R20 000 to be paid upon occupation of the flat to protect her against breakages. Luckily, Jack inherited R100 000 a couple of years ago, and he still has R18 424,38 left. YOU ARE REQUIRED TO: calculate the effective annual interest rate at which Jack should invest his money to enable him to pay the required deposit eight months from today.

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