You want to purchase a house and are reviewing variations in how to structure the mortgage. One of your considerations is how much interest you pay. You need to calculate the total interest paid for the following scenarios: • 25 year mortgage at 5% interest with monthly payments (base case) • 25 year mortgage at 6% interest with monthly payments 20 year mortgage at 5% interest with monthly payments 25 year mortgage at 5% interest with monthly payments and a 5% down payment 25 year mortgage at 5% interest with monthly payments and a 20% down payment 25 year mortgage at 5% interest with payments twice per month Structure your answer in a way that is easy to understand. The top header row (row 1) should describe the cases. The left column (column A) should describe the data that appears in the cell such as interest rate. The bottom row should contain the total interest paid for each case. The layout of your table should be something like below. The marking is flexible, you might have more rows because you need to decide what rows to have for showing the calculations. A B C D E F 1 Cases Scenario 1 description Scenario 2 description Scenario 3 Scenario 4 description description Scenario 5 description G Scenario 6 description 3 4 -234567820723 9 10 Interest 11 12 13 House cost $450,000.00 $450,000.00 $450,000.00 $450,000.00 $450,000.00 $450,000.00 Downpayment You estimate that your house will cost $450,000. This should be entered Sheet2. Note: The key function to use for this case is PMT(). However, PMT() does not calculate the interest. Note: A downpayment is cash that you have so that you don't need to include that amount in the loan. For example, to purchase an $80,000 car with a $10,0000 downpayment, you need to take out a $70,000 loan.
You want to purchase a house and are reviewing variations in how to structure the mortgage. One of your considerations is how much interest you pay. You need to calculate the total interest paid for the following scenarios: • 25 year mortgage at 5% interest with monthly payments (base case) • 25 year mortgage at 6% interest with monthly payments 20 year mortgage at 5% interest with monthly payments 25 year mortgage at 5% interest with monthly payments and a 5% down payment 25 year mortgage at 5% interest with monthly payments and a 20% down payment 25 year mortgage at 5% interest with payments twice per month Structure your answer in a way that is easy to understand. The top header row (row 1) should describe the cases. The left column (column A) should describe the data that appears in the cell such as interest rate. The bottom row should contain the total interest paid for each case. The layout of your table should be something like below. The marking is flexible, you might have more rows because you need to decide what rows to have for showing the calculations. A B C D E F 1 Cases Scenario 1 description Scenario 2 description Scenario 3 Scenario 4 description description Scenario 5 description G Scenario 6 description 3 4 -234567820723 9 10 Interest 11 12 13 House cost $450,000.00 $450,000.00 $450,000.00 $450,000.00 $450,000.00 $450,000.00 Downpayment You estimate that your house will cost $450,000. This should be entered Sheet2. Note: The key function to use for this case is PMT(). However, PMT() does not calculate the interest. Note: A downpayment is cash that you have so that you don't need to include that amount in the loan. For example, to purchase an $80,000 car with a $10,0000 downpayment, you need to take out a $70,000 loan.
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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Transcribed Image Text:You want to purchase a house and are reviewing variations in how to structure the mortgage.
One of your considerations is how much interest you pay. You need to calculate the total
interest paid for the following scenarios:
•
25 year mortgage at 5% interest with monthly payments (base case)
•
25 year mortgage at 6% interest with monthly payments
20 year mortgage at 5% interest with monthly payments
25 year mortgage at 5% interest with monthly payments and a 5% down payment
25 year mortgage at 5% interest with monthly payments and a 20% down payment
25 year mortgage at 5% interest with payments twice per month
Structure your answer in a way that is easy to understand. The top header row (row 1) should
describe the cases. The left column (column A) should describe the data that appears in the cell
such as interest rate. The bottom row should contain the total interest paid for each case.
The layout of your table should be something like below. The marking is flexible, you might have
more rows because you need to decide what rows to have for showing the calculations.
A
B
C
D
E
F
1
Cases
Scenario 1
description
Scenario 2
description
Scenario 3 Scenario 4
description
description
Scenario 5
description
G
Scenario 6
description
3
4
-234567820723
9
10 Interest
11
12
13
House cost
$450,000.00 $450,000.00 $450,000.00
$450,000.00
$450,000.00 $450,000.00
Downpayment
You estimate that your house will cost $450,000.
This should be entered Sheet2.
Note: The key function to use for this case is PMT(). However, PMT() does not calculate the
interest.
Note: A downpayment is cash that you have so that you don't need to include that amount in
the loan. For example, to purchase an $80,000 car with a $10,0000 downpayment, you need to
take out a $70,000 loan.
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