Level 1 Chapter 14 - Section I - Exercise 17 Luis Schambach is shopping for a 15-year mortgage for $150,000. Currently, the Fortune Bank is offering an 8.5% mortgage with 4 discount points; the Northern Trust Bank is offering an 8.75% mortgage with no points. Luis is unsure which mortgage is a better deal and has asked you to help him decide. (Remember, each discount point is equal to 1% of the amount financed.) a. What would be the total interest paid on each loan? Mortgage amount =

Level 1 Chapter 14 - Section I - Exercise 17 Luis Schambach is shopping for a 15-year mortgage for $150,000. Currently, the Fortune Bank is offering an 8.5% mortgage with 4 discount points; the Northern Trust Bank is offering an 8.75% mortgage with no points. Luis is unsure which mortgage is a better deal and has asked you to help him decide. (Remember, each discount point is equal to 1% of the amount financed.) a. What would be the total interest paid on each loan? Mortgage amount =

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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QUESTION 5 Given the following information, calculate the loan-to-value ratio (LTV) ratio for this property. Assume that there are no discount points or other up-front financing costs associated with the mortgage. Acquisition price: Equity investment: Mortgage term: Mortgage interest rate: 33.3% 66.7% 50% 80% $675,000 $225,000 25 years 8.0% annually
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QUESTION 15 Ann buys a property that costs $1,000,000. She finances the purchase with a 70% LTV mortgage. She gets a 20 year interest only fixed rate mortgage at an annual interest rate of 5%, with annual compounding and annual payments. Ann must pay 2 points upfront in mortgage closing costs (as a % of the loan amount). The loan has a 5/4/3/2/1 prepayment penalty structure (she must pay a 5% penalty if she prepays at any time in the first year, 4% penalty in the second year, etc). Suppose Ann will sell the property during year 3, after she makes the 3rd year's mortgage payment and pays off the balance when she sells. What is Ann's annualized IRR for the loan? A. 5.74% B. 6.69% C. 5.10% D. 5.00%
16. Problem 5.37 (Paying off Credit Cards) eBook Simon recently received a credit card with a 19% nominal interest rate. With the card, he purchased an Apple iPhone 7 for $460.00. The minimum payment on the card is only $10 per month. a. If Simon makes the minimum monthly payment and makes no other charges, how many months will it be before he pays off the card? Do not round intermediate calculations. Round your answer to the nearest whole number. month(s) b. If Simon makes monthly payments of $30, how many months will it be before he pays off the debt? Do not round intermediate calculations. Round your answer to the nearest whole number. month(s) c. How much more in total payments will Simon make under the $10-a-month plan than under the $30-a-month plan. Do not round intermediate calculations. Round your answer to the nearest cent.
QUESTION 22 Ann wants to buy a building. The annual NOI for the building will be $175,000. She wants to get a 20 year interest only fixed rate mortgage at an annual rate of 8.35% with annual compounding and annual payments to buy the building. The lender has a minimum Debt Service Coverage Ratio (DSCR) of 1.20. What is the largest annual loan payment the lender will allow Ann to make based on the DSCR? OA. $1,746,506.99 B. $210,000.00 OC. $145,833.33 OD. $102,600.26
red Question 8 You are looking to purchase a $300,000 home with a 80% LTV mortgage with a term of 30-years and an interest rate of 6%. Your income is $120,000 per year, the annual property taxes are $3,600, and the hazard insurance premium is $1,200 per year. The borrowers other debt service consists of a $700/month car payment and $800/month credit card minimum payment. What is the front-end DTI ratio associated with this borrower/loan? Please input your answer as a percentage (74% would be input as 74). nswered
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QUESTION 4 Ann wants to buy a property which costs $3,500,000. She gets a mortgage with 75% LTV. What is Ann's Debt to Equity ratio for this purchase? A. 5:1 OB. 3:1 OC. 3:4 OD. 4:1
Problem 7-3 (LG 7-4) You plan to purchase an $110,000 house using a 15-year mortgage obtained from your local bank. The mortgage rate offered to you is 4.25 percent. You will make a down payment of 12 percent of the purchase price. a. Calculate your monthly payments on this mortgage. b. Calculate the amount of interest and, separately, principal paid in the 100th payment. c. Calculate the amount of interest and, separately, principal paid in the 115th payment. d. Calculate the amount of interest paid over the life of this mortgage. (For all requirements, do not round intermediate calculations. Round your answers to 2 decimal places. (e.g., 32.16)) a. Monthly payment b. Amount of interest Amount of principal C. Amount of interest Amount of principal d. Amount of interest paid Amount