You have a choice between the following two identical properties: Property A is priced at $162,000 with 80 percent financing at a 10.5percent interest rate for 20 years. Property B is priced at $172,000 with an assumable mortgage of $100,000 at 9 percent interest with20 years remaining. Monthly payments are $899.73. A second mortgage for $28,000 can be obtained at 13 percent interest for 20years. All loans require monthly payments and are fully amortizing.Required:a. With no preference other than financing, which property would you choose?b. Which property would you choose if the seller of Property B provided a second mortgage for $28,000 at the same 9 percent rate asthe assumable loan?c. Which property would you choose if the seller of Property B provided a second mortgage for $38,000 at the same 9 percent rate asthe assumable loan so that no additional down payment would be required by the buyer if the loan were assumed?Complete this question by entering your answers in the tabs below.Required A Required B Required CWith no preference other than financing, which property would you choose?Desirable property< Required ARequired B>

It is the process of making decisions that involve the management of costs in order to achieve…

You have a choice between the following two identical properties: Property A is priced at $162,000 with 80 percent financing at a 10.5 percent interest rate for 20 years. Property B is priced at $172,000 with an assumable mortgage of $100,000 at 9 percent interest with 20 years remaining. Monthly payments are $899.73. A second mortgage for $28,000 can be obtained at 13 percent interest for 20 years. All loans require monthly payments and are fully amortizing.

You have a choice between the following two identical properties: Property A is priced at $162,000 with 80 percent financing at a 10.5 percent interest rate for 20 years. Property B is priced at $172,000 with an assumable mortgage of $100,000 at 9 percent interest with 20 years remaining. Monthly payments are $899.73. A second mortgage for $28,000 can be obtained at 13 percent interest for 20 years. All loans require monthly payments and are fully amortizing.

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

See similar textbooks

Similar questions

if your bank approves a $300,000 mortagage for your new home, at an annual percentage rate of 4.5 % and with a monthly payment of $1800 What will be the remaining mortgage amount after you make 4 monthly payments
You are choosing between two mortgage options for a $1,000,000 property. The first option is a 60% LTV mortgage at an interest rate of 7%. The payment on this mortgage is calculated as if it were a 30 year mortgage, but the mortgage balance is due in 10 years. This loan also charges a 1% origination fee. The second option consists of two loans combined together. The primary loan (first mortgage) is a 50% LTV loan at an interest rate of 6.5%. This loan is an Interest Only loan due in 10 years and the loan charges a 1% origination fee. The secondary loan for this option is a 10% LTV loan at an interest rate of 9%. This loan is fully amortizing and is also due in 10 years and charges a 2% origination fee. What is the combined payment of the two loans that together form the 2nd loan option? Multiple Choice O $3,975.094 $3,248.4852 $2,783.4973 $1,846.7921
A mortgage loan is made to Mr. Jones for $30,000 at 10 percent interest for 20 years. If Mr. Jones has a choice between either a fully amortizing CPM or a CAM, which one would result in his paying a greater amount of total interest over the life of the mortgage? Would one of these mortgages be likely to have a higher interest rate than the other? Explain your answer.
A property is available for sale that could be financed with a fully amortizing $250,000 loan at 8% with a monthly payment over 30 years. The builder is offering buyers a mortgage that reduces the payment by 20% for first and second year. After the second year, regular payment would be made for the remainder of the loan term. What is the first-year monthly payment for buyer? 1467.53 1657.32 1723.56
Pls show complete steps and all parts
You are considering buying a new house, and have found that a $250,000, 30-year fixed-rate mortgage is available with an interest rate of 8 percent. This mortgage requires 360 monthly payments of approximately $1,786 each. If the interest rate rises to 9 percent, what will happen to your monthly payment?
As a graduating senior with a promising career in finance, Central Bank offers you a mortgage of $200,000. You may choose between a 30-year mortgage with an interest rate of 4.375% or a 15-year mortgage at 3.500%. Both interest rates are annual stated rates with interest compounded monthly. Assume that for 30-year mortgage, the bank requires you to pay 1% point. Compute an amortization table that shows the amount of interest you can report for taxes and amount of principal payment each year for each loan. Use two different ways to do it as we did in class: with and without using the functions PPMT and IPMT. PLEASE USE EXCEL and show functions.
You have just purchased a new warehouse. To finance the purchase, you've arranged for a 25-year mortgage for 80 percent of the $1,800,000 purchase price. The monthly payment on this loan will be $10,800. What is the APR? The EAR? A. 7.67 percent; 7.94 percent B. 7.67 percent; 8.03 percent C. 7.72 percent; 7.94 percent D. 7.72 percent; 8.03 percent E. 7.75 percent; 8.03 percent
A property is available for sale that could normally be financed with a fully amortizing $81,200 loan at a 10 percent rate with monthly payments over a 25-year term. Payments would be $737.87 per month. The builder is offering buyers a mortgage that reduces the payments by 50 percent for the first year and 25 percent for the second year. After the second year, regular monthly payments of $737.87 would be made for the remainder of the loan term. Required: a. How much would you expect the builder to have to give the bank to buy down the payments as indicated? b. Would you recommend the property be purchased if it was selling for $5,000 more than similar properties that do not have the buydown available? Complete this question by entering your answers in the tabs below. Required A Required B How much would you expect the builder to have to give the bank to buy down the payments as indicated? (Do not round intermediate calculations. Round your final answer to 2 decimal places.) Down…
You purchase a home and take on a $600k mortgage. The amortization period of the loan is 20 years, and the first term is a fixed rate for 4 years during which time you are required to make semi-monthly (each half-month) payments at 8% APR compounded quarterly. On the first-year anniversary you make an additional $50,000 payment. Find the balance owing immediately after the second anniversary of your payments. The balance is within $200 of which of the following? 518,025 518,425 518,825 519,225 None of the above
A new home was purchased in Niagara Fall’s Butler Heights subdivision for $375,000 by Karen. The house is going to be financed by making a down payment of 15% and financing the balance with a conventional mortgage. The mortgage is to be amortized over 20 years with weekly payments. The rate chosen for the first four years of the mortgage is 2.79% compounded semi-annually. Show all work with formulas a) Determine the size of the weekly payments? b) What will the outstanding balance be after the first four years? c) Determine the size of the new weekly payment if after the first four year term she renews the mortgage using a fixed rate of 2.04% compounded semi-annually.
ABC purchased a piece of property for $3,000,000. The loan terms require monthly payments at the beginning of each month for 15 years at an annual percentage rate of 9 percent. What is the amount of each mortgage payment?