You are ready to buy a house and you have $15,000 for a down payment and closing costs. Closing costs are estimated to be 4% of the loan value. You have an annual salary of $48,000, The bank is willing to allow your monthly mortgage payment to be equal to 30% of your monthly income. The interest rate on the loan is 4.0% per year with monthly compounding for a 30-year fixed rate loan. Provide answers in whole dollars, no decimals, no dollar sign, eg., 120514. A) How much money will the bank loan you? B) How much can you offer for the house?

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
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Question 1
You are ready to buy a house and you have $15,000 for a down payment and closing costs.
Closing costs are estimated to be 4% of the loan value.
You have an annual salary of $48,000.
The bank is willing to allow your monthly mortgage payment to be equal to 30% of your monthly income.
The interest rate on the loan is 4.0% per year with monthly compounding for a 30-year fixed rate loan.
Provide answers in whole dollars, no decimals, no dollar sign, e.g., 120514.
A) How much money will the bank loan you?
B) How much can you offer for the house?
Question 2
Suppose you want to borrow $30,000 for a new car.
You can borrow at 5% per year, compounded monthly.
If you take a 4 year loan, what is your monthly payment?
Since the monthly payment is an outflow, enter your answer as a negative number, rounded to two decimals, no dollar sign,
e.g. 217.34.
Transcribed Image Text:Question 1 You are ready to buy a house and you have $15,000 for a down payment and closing costs. Closing costs are estimated to be 4% of the loan value. You have an annual salary of $48,000. The bank is willing to allow your monthly mortgage payment to be equal to 30% of your monthly income. The interest rate on the loan is 4.0% per year with monthly compounding for a 30-year fixed rate loan. Provide answers in whole dollars, no decimals, no dollar sign, e.g., 120514. A) How much money will the bank loan you? B) How much can you offer for the house? Question 2 Suppose you want to borrow $30,000 for a new car. You can borrow at 5% per year, compounded monthly. If you take a 4 year loan, what is your monthly payment? Since the monthly payment is an outflow, enter your answer as a negative number, rounded to two decimals, no dollar sign, e.g. 217.34.
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