Suppose you are thinking about purchasing a small office building for $1,500,000. The 30 year fixed rate mortgage that you have arranged covers 80%of the purchase price and has an interest rate of 8%. Assume you were to default and go into foreclosure in year 10 of this loan. If the lender was able tosell this property for $700,000, how much does the lender stand to lose in the absence of PMI?Multiple Choice$0$260,000$92,696$352,696

Office building cost $1500000Interest rate 8%30 year fixed rate mortgage that arranged covers 80% of…

Answered: Suppose you are thinking about…

Advanced Engineering Mathematics

10th Edition

ISBN:9780470458365

Author:Erwin Kreyszig

Publisher:Erwin Kreyszig

Chapter2: Second-order Linear Odes

Section: Chapter Questions

Problem 1RQ

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Scott wants to purchase a Toyota Rav4 XLE. The model he wants is available for $26,789. Scott has saved $4,000 for a down payment, and the dealer has offered $3,500 for his trade- in. He is considering three financing options. Toyota's financial department is offering 0% interest for three years. Scott's credit union is offering 1.98% compounded monthly for four years. His bank is offering 2.97% compounded monthly for five years. Your assignment: a) What would Scott's monthly loan payment be for each option? b) What total amount of interest would Scott pay for each option? c) Describe the advantages and disadvantages of each financing option. If you were Scott, which of these three financing options would you use and why?
A few years back, Dave and Jana bought a new home. They borrowed $230,415 at an annual fixed rate of 5.49% (15-year term) with monthly payments of $1,881.46. They just made their 65th payment, and the current balance on the loan is $208,555.87. Interest rates are at an all-time low, and Dave and Jana are thinking of refinancing to a new 15-year fixed loan. Their bank has made the following offer: 15-year term, 3.0%, plus out-of-pocket costs of $2,937. The out-of-pocket costs must be paid in full at the time of refinancing. The Excel function: =PMT(rate, nper, pv, fv, type) calculates the payment for a loan based on constant payments and a constant interest rate. The arguments of this function are: rate = the interest rate for the loan nper = the total number of payments pv = present value (the amount borrowed) fv = future value [the desired cash balance after the last payment (usually 0)] type = payment type (0 = end of period, 1 = beginning of the period) For example,…
A radio commercial for a loan company states: "You only pay 30e a day for each $500 borrowed." If you borrow $2,336 for 151 days, what amount will you repay, and what annual interest rate is the company actually charging? (Assume a 360-day year.)
Karim Soltan is shopping for a new vehicle, and has noticed that many vehicle manu-facturers are offering special deals to sell off the current year’s vehicles before the new models arrive. Karim’s local Ford dealership is advertising 3.9% financing for a full 48 months (i.e., 3.9% compounded monthly) or up to $4000 cash back on selected vehicles. The vehicle that Karim wants to purchase costs $24 600 including taxes, delivery, licence, and dealer preparation. This vehicle qualifies for $1800 cash back if Karim pays cash for the vehicle. Karim has a good credit rating and knows that he could arrange a vehicle loan at his bank for the full price of any vehicle he chooses. His other option is to take the dealer financing offered at 3.9% for 48 months. Karim wants to know which option requires the lower monthly payment. He knows he can use annuity formulas to calculate the monthly payment.QUESTIONS Suppose Karim buys the vehicle on July 1. What monthly payment must Karim make if he…
Suppose Avary, who works for Nasa, buys a fried chicken franchise in Atlanta with a full price of $858,000. Avary will pay 10% of the full price as a downpayment, and will borrow the rest on a 30-year term loan. The annual rate of interest on the loan is 6%, and is compounded monthly. What will the monthly payment be?

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