You purchase a home for $525,000 by taking out a standard mortgage at 3.3% interest compounded monthly, for 30 years. To avoid other fees and higher interest, you pay 10% of the purchase price right now (and thereby reduce the amount you finance). a) How much are you financing? (What is the loan amount?) b) How much will you pay each month? What is the periodic interest rate? How many compounding periods will there be
You purchase a home for $525,000 by taking out a standard mortgage at 3.3% interest compounded monthly, for 30 years. To avoid other fees and higher interest, you pay 10% of the purchase price right now (and thereby reduce the amount you finance). a) How much are you financing? (What is the loan amount?) b) How much will you pay each month? What is the periodic interest rate? How many compounding periods will there be
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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Question
You purchase a home for $525,000 by taking out a standard mortgage at 3.3% interest
compounded monthly, for 30 years. To avoid other fees and higher interest, you pay 10% of
the purchase price right now (and thereby reduce the amount you finance).
a) How much are you financing? (What is the loan amount?)
b) How much will you pay each month?
What is the periodic interest rate?
How many compounding periods will there be?
compounded monthly, for 30 years. To avoid other fees and higher interest, you pay 10% of
the purchase price right now (and thereby reduce the amount you finance).
a) How much are you financing? (What is the loan amount?)
b) How much will you pay each month?
What is the periodic interest rate?
How many compounding periods will there be?
c) How much equity will you have in 16 years?
d) How much have you paid in total over these 16 years?
e)How much have you paid in interest over these 16years?
Expert Solution
Step 1
As per Bartleby guidelines,If a question with multiple sub-parts are posted, first 3 sub-parts will be answered for you. Kindly resubmit the question with remaining sub-parts to be solved
a) Amount Financed or Loan amount
= Total loan amount - Downpayment made
=$525,000 - ( 10% of $525,000)
= $525,000 - $52,500
=$ 472,500
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