s. Hector is a car salesman and he is willing to move to wherever Maria gets transferred. Together they make $8,000 in gross m me and pay 40% in taxes and withholdings every month. Between them they have monthly payment of $400 in student loans a bans, and their credit cards payments average $450 per month. They currently lease a luxury condo for $1,400 per month. The un every Christmas. Since they both work a lot of hours, they eat out at restaurants for most meals. They currently have nothi ector's grandparents have said they will give them a 20% down payment for the new home. have found a very nice town house available for $300,000. Assuming a 20% down payment and a 30-year fixed rate mortgag will their PITI be? Annual property taxes are $2,800, the power bill is $1,500 per year and homeowner's insurance premium 367 68

s. Hector is a car salesman and he is willing to move to wherever Maria gets transferred. Together they make $8,000 in gross m me and pay 40% in taxes and withholdings every month. Between them they have monthly payment of $400 in student loans a bans, and their credit cards payments average $450 per month. They currently lease a luxury condo for $1,400 per month. The un every Christmas. Since they both work a lot of hours, they eat out at restaurants for most meals. They currently have nothi ector's grandparents have said they will give them a 20% down payment for the new home. have found a very nice town house available for $300,000. Assuming a 20% down payment and a 30-year fixed rate mortgag will their PITI be? Annual property taxes are $2,800, the power bill is $1,500 per year and homeowner's insurance premium 367 68

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

Morgan lives alone and needs to move to start a new job. She drives 400 kilometrescloser to her new place of employment. The drive takes her 1 day. She pays forhotels for 10 days in her new city while waiting for her apartment to be availablewhich costs $100 per day ($1,000 total). She pays a mover $1,200 to move herfurniture. What is the maximum deduction Morgan can takè for moving expenses,assuming she has sufficient income in the new location?
Vashti has a suburban home within walking distance of the railroad. She commutes to work in the city at a cost of $366.50 a month. She also rents a car every weekend, which costs $450 a month including insurance and fuel. She is considering purchasing a new car for cash to replace commuting and rental costs. It would cost $22,000, get 31 miles per gallon, and have an estimated resale value of $8,000 after five years. After buying this car, Vashti would drive 20,000 miles per year and have maintenance and repairs of $1,400 per year, insurance of $1,500 per year, and fuel costs of $2.50 per gallon. Assume that all costs occur at the end of the year and that she sells the car at the end of the fifth year. If Vashti's discount rate is 7 percent after tax, should she purchase the car?
Jose and Rosa are looking for a condo. Their combined gross annual income is $61,000. The best mortgage rate offered by their bank is a 3.12 percent, five-year fixed rate compounded semi-annually with a 20-year amortization. The annual property taxes are estimated at $1,360, and the annual heating costs are $1,340. Their personal debt consumption is $500 per month. Condo fees are estimated at $700 per month. The bank's guideline for TDS is 30 percent. Based on this information, what is the maximum monthly mortgage payment they could afford? The maximum monthly mortgage payment they could afford is $ (Round to the nearest cent.)
Deja owns a photo printing business and wants to purchase a new state-of-the-art photo printer that she found online for $9,275, plus sales tax of 5.5%. The supply company is offering cash terms of 2/15, n/30, with a 1.5% service charge on late payments, or 90 days same as cash financing if Deja is approved for a company line of credit. If she is unable to pay within 90 days under the second option, she would have to pay 22.9% annual simple interest for the first 90 days, plus 2% simple interest per month on the unpaid balance after 90 days. Deja has an excellent credit rating but is unsure of what to do. a) If Deja took the cash option and was able to pay off the printer within the 15-day discount period, how much would she save? How much would she owe? b) If Deja takes the 90 days same as cash option and purchases the printer on December 30 to get a current-year tax deduction, using exact time, what is her deadline for paying no interest in a non-leap year? In a leap year?
Deb and Rusty have just gotten married and wish to buy a home. They both work in Boston and have a combined income of $90,000. They found a modest starter house which they are buying for $350,000. 1. They plan to use their $40,000 is savings to cover the closing costs the bank will charge them, which are 1% of the amount they borrow from the bank. The rest of the savings will be used as a down payment. Determine the largest amount they can use for a down payment and still pay the closing costs. 2. Using the amount Deb and Rusty have to borrow from part 1, open Excel and create a 20-year amortization schedule, giving monthly payments for the amount they borrowed at a 4.5% annual interest rate. You must use the pmt function in Excel to compute the monthly payment. Title this worksheet Amortization. For your answer to this question write “See Excel Workbook”. 3. Use the amortization schedule to compute the total amount of interest they will pay to the bank over the 20 years. 4. Create a…
A couple found a house selling for $115,500.The taxes on the house are $1200 per year, and insurance is $360 per year. They are requesting a conventional loan from the local bank. The bank is currently requiring a 15% down payment and 3 points, and the interest rate is 10%. The couple's gross monthly income is $4850. They have more than 10 monthly payments remaining on a car, a boat, and furniture. The total monthly payments for these items is $420. Their bank will approve a loan that has a total monthly mortgage payment of principal, interest, property taxes, and homeowners' insurance that is less than or equal to 28% of their adjusted monthly income. Complete parts a) through g) below. Part 1 a) Determine the required down payment. The required down payment is $?
1) Betty Smith (that scoundrel Bob’s wife) wants to save $500,000 in four years. She knows that Bob isno good and is planning on leaving him. She wants to make monthly deposits into an account thatpays 5%monthly. How much should she deposit at the end of each month? For those that are curious,Betty makes money by selling poodle prints. She dips her poodle in a giant ink well and presses it ontoa canvas. Dog lovers will buy anything.
Sam and Deb have a weekly net income of $1700. Their monthly expenses, not related to housing, are $2875. They have savings of $32 000. They are considering two housing options: Option 1: Renting a 2-bedroom condo for $1650 a month, plus utilities averaging $210 a month Option 2: Buying a 2-bedroom condo for a down payment of $24 500, bi-weekly mortgage payments of $1100, and a monthly condo fee of $475 a) Determine the monthly cost of each housing option. Which one can Sam and Deb afford? Which would you recommend? b) Suppose Sam’s mother falls ill and he has to pay $575 every two weeks to cover her expense. Calculate the additional monthly expenses. Based on your answer in a), would your recommendation change? Explain
Your parents have accumulated a $120,000 nest egg. They have been planning to use this money to pay college costs to be incurred by you and your sister, Courtney. However, Courtney has decided to forgo college and start a nail salon. Your parents are giving Courtney $15,000 to help her get started, and they have decided to take year-end vacations costing $10,000 per year for the next four years. How much money will your parents have at the end of four years to help you with graduate school? You plan to work on a master’s and perhaps a PhD. If graduate school costs $26,353 per year, approximately how long will you be able to stay in school based on these funds? Use 9 percent as the appropriate interest rate throughout this problem. Round all values to whole numbers Flag question: Question 6 Question 64.5 pts What are the funds available after the Nail Salon? Group of answer choices $100,000 $105,000 $72,000 $98,500 Flag question: Question 7 Question 74.5…
John and Jane have been saving to pay for their daughter Macy's college education. Macy just turned 9 at (t-0), md she will be entering college 9 years from now (at t-9). College tuition and expenses are currently $20,000 a year, but they are expected to increase at a rate of 6% a year. Tuition and other costs will be due at the end of years 9, 10, 11 and 12. To fund the tuition, John and Jane plan to save $15,000 in their college savings account today (att0). Additionally. they plan to save $5,000 in cach of the next 3 years (at t-1, 2, and 3). Then they plan to make S equal annnal contributions in each of the following years, t How large must the annual payments att-4, 5, 6, 7 and 8 be to cover Macy's anticipated college conts? 4, 5, 6, 7 and 8. They expeet their investment account to cam 10%. $10,817.03 $14,993.59 $12,127.51 $9,422.02 $13,323.61
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).
Kathy wants to buy a condominium selling for $95,000. The taxes on the property are$1500 per year, and homeowners' insurance is $336 per year. Kathy's gross monthly income is$4000. She has 15 monthly payments of $135 remaining on her van. The bank is requiring 20% down and is charging a 9.5% interest rate with no points. Her bank will approve a loan that has a total monthly mortgage payment of principal, interest, property taxes, and homeowners' insurance that is less than or equal to 28% of her adjusted monthly income. (a) Determine the required down payment. (b) Determine 28% of her adjusted monthly income. (c) Determine the monthly payment of principal and interest for a 25-year loan. (d) Determine her total monthly payment, including homeowners' insurance and taxes. (e) Does Kathy qualify for the loan? (f) Determine how much of the first payment on the mortgage is applied to the principal. (g) Determine the total amount she pays for the condominium with a 25-year conventional loan.…

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