Mary is buying a town house priced at $360,000.00. Mortgage A calls for her to make equal monthly payments for 10 years at a monthly interest rate of 0.96 %with her first payment due in 1 month. However, her loan officer has offered her a new opportunity involving equal monthly payments for 15 years at amonthly interest rate of 1.26% with her first payment due later today. By how much would switching from mortgage A to the new opportunity reduce theamount of Mary's monthly loan payment?$80.32 (plus or minus 10 cents)$60.48 (plus or minus 10 cents)$10.31 (plus or minus 10 cents)$24.83 (plus or minus 10 cents)none of the answers are within 10 cents of the correct answer

Option b: This option is correct. Step 1:We have to calculate the monthly payments with the first…

Answered: Mary is buying a town house priced at…

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

An investor plans to purchase a 2-bedroom condo in San Francisco. The price of the property is $300,000. She will have a 15-year 3% APR mortgage with a 20% down payment. The investor will keep the condo in the next 15 years and lease the condo. Suppose the rent collected by the renter will just cover the mortgage payment and other expenses (e.g., condo fee, tax, maintenance). In other words, in- and out- cash flows just cancelled out. The value of the house is expected to inflate by 50%. What is the monthly return to the investor? Group of answer choices 14.377% 1.198% 1.126% 13.508%
Arthur is planning on buying a house and needs to take out mortgage for $200,000 . He has two choices a 30 year with monthly payments of $1,468 and a 15 years with monthly payments of 1,854 . Arthur want to pay the Lowest interest rate possible What is interest rate on each mortgage and which mortgage should he pick? He changes his mind and want to pay the smallest amount of total interest. What are the total interest charges for each mortgage and which mortgage should he pick now ?
A couple buys a $180000 home, making a down payment of 20%. The couple finances the purchase with a 15 year mortgage at an annual rate of 3.8%. Find the monthly payment. If the couple decides to increase the monthly payment to $1100, find the number of payments.
Dan is considering borrowing $375,000 to purchase a new condo. Based on that information, answer the following questions. Show all work. Calculate the monthly payment needed to amortize an 8% fixed-rate 30-year mortgage loan. Calculate the monthly amortization payment if the loan in (a.) was for 15 years instead. In a few sentences, explain the effect of a smaller loan period. How does it influence the monthly payment and interest
Christina Sanders is concerned about the financing of a home. She saw a small Cape Cod–style house that sells for $90,000. If she puts 10% down, what will her monthly payment be at (a) 30 years, 5%; (b) 30 years, 512%512% ; (c) 30 years, 6%; and (d) 30 years, 612%612% ? What is the total cost of interest over the cost of the loan for each assumption? (Round your answers to the nearest cent.)
Angie wants to obtain a $500,000 mortgage, amortized over 25 years. Interest rates are currently 8%, compounded twice a year. What is the Effective Annual Interest Rate? What is the monthly payment on the mortgage? What is the balance outstanding after 60 months? What is the total value of interest paid over the life of the mortgage?How much would Angie pay per week if she decided to change her mortgage payments to weekly instead of monthly?
A couple wants to purchase a new house and feel that they can afford a mortgage payment of $600 a month. They are able to obtain a 30-year 7.4% mortgage (compounded monthly) but must put down 20% of the cost of the house. Assuming that they have enough savings for the down payment, how expensive a house can they afford? The couple can afford a house that costs up to $ ☐ . (Round the final answer to the nearest dollar as needed. Round all intermediate values to six decimal places as needed.)
Da Feng is looking to refinance his home because rates have gone down since he purchased the house 5 years ago. He started with a 30-year fixed-rate mortgage of $276,000 at an annual rate of 7.30%. He has to make monthly payments. He can now get a 25-year fixed-rate mortgage at an annual rate of 4.30% on the remaining balance of his initial mortgage. This loan also requires monthly payments. In order to re-finance, Da Feng will need to pay closing costs of $3,700. These costs are out of pocket and cannot be rolled into the new mortgage. How much will refinancing save Da Feng? (i.e. What is the NPV of the refinancing decision?) $181,311.02 您不应该选择此项 Your calculation was based on a wrong balance on the existing mortgage. O $85,659.68 $86,861.44 $83,161.44
This problem is a complex financial problem that requires several skills, perhaps some from previous sections.Clark and Lana take a 30-year home mortgage of $125,000 at 7.9%, compounded monthly. They make their regular monthly payments for 5 years, then decide to pay $1200 per month. (a) Find their regular monthly payment. (Round your answer to the nearest cent.) (a) Find their regular monthly payment. (Round your answer to the nearest cent.) (c) How many payments of $1200 will it take to pay off the loan? Give the answer correct to two decimal places. (d) Use your answer to part (c) to find how much interest they save by paying the loan this way. (Round your answer to the nearest cent.)
Harriet Marcus is concerned about the financing of a home. She saw a small cottage that sells for $75,000. Assuming that she puts 20% down, what will be her monthly payment and the total cost of interest over the cost of the loan for each assumption? (Use the Table 15.1) Note: Do not round intermediate calculations. Round your answers to the nearest cent. a. 25 Years, 5.00% b. 25 Years, 5.50% c. 25 Years, 5.75% d. 25 Years, 6.00% Monthly payment Total cost of interest e. What is the savings in interest cost between 5.00% and 6.00%? Note: Round your answer to the nearest dollar amount. Interest cost
I need the answer of the question attached. Please provide all possible answers. Thank you!
Tobin is buying a new apartment. He can afford a mortgage payment of $1990 a month, and a down payment of $11000. He obtained a 16-year loan at 6.05% compounded monthly. Use Excel to determine what the most expensive apartment he can buy under these terms. How much will Tobin pay in interest over the 16-year years? Apartment price = $ Interest paid = $

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