Your parents are planning to buy a second house at the price of $400,000 with 20% down payment. While their bank offers a mortgage loan rate of 4% per annum. What is their monthly mortgage payment if they decide to pay off the mortgage in 15 years? You need to borrow the rest 80% of the house price and finance. Show all work.

Q: You plan to send your first born child to College for a 4-year degree with 4 annual payments.  Your…

A: The present value is the value of the sum received at time 0 or the current period. It is the value…

Q: Bonnie and Claude want to buy a house. They can afford monthly payments of $1125.00. The bank offers…

A: The maximum amount that the bank will lend will be the present value of the monthly payments that…

Q: You want to buy a $210,000 home. You plan to pay $10500 as a down payment, and take out a 30 year…

A: The loan amount would be the remaining amount after deducting the down payment from the purchase…

Q: You are deciding to buy a car to commute to work given the comparatively low interest of 6% per…

A: A loan is a debt arrangement that provides financial assistance to a person to full fill a specific…

Q: You want to buy a $255,000 home. You plan to pay 5% as a down payment, and take out a 30 year loan…

A: Amount of home = $255,000 Down payment = 5%  The time duration of the loan = 30 years

Q: The McBertys have $40,000 in savings to use as a down payment on a new home. They also have…

A: To calculate the price range for houses for a 30-year loan, the formula isDown payment  + Equated…

Q: You planned to borrow $575,000 for a house at 2.9% interest for 30 years.  You find a house that you…

A: A loan is a sum of money obtained from outside sources such as banks and repaid over time in fixed…

Q: Nikul

A: The objective of this question is to calculate the total cost of the loan including the principal,…

Q: You want to buy a home in 5 years, and you think at that time you will be able to afford to buy a…

A: Monthly payment refers to an amount that is being paid at every month for the repayment of the…

Q: The McBertys have $20,000 in savings to use as a down payment on a new home. They also have…

A: When the lender lends a loan to the borrower, he charges a rate of interest on the borrowed amount.…

Q: The house price is $700 thousand. You will fund $100 thousand of this upfront, and fund the…

A: The price of house = $700,000. DownPayment =$100,000 Mortgage loan Tenure = 30 year  The mortgage…

Q: Maria and John have found a house that has a selling price of $300,000.  They will make a 20% down…

A: Mortgage payments are the monthly payments of the loan amount borrowed for a certain period of time.…

Q: You have a client who wants to buy a house. He needs $40,000 for a down payment and has $30,000…

A: Here we have to invest $ 30000 at the 5% annual rate but compounded quarterly. and want $ 40000 in…

Q: You have saved $14000 for a down payment on a house. Your bank requires a minimum down payment of…

A: A down payment is a sum of money that the borrower contributes up ahead towards the cost of a loan…

Q: You are purchasing a home and plan to take out a 25 year mortgage loan for $300,000. The interest…

A: The correct option is option “c”.

Q: Alexa needs $8,600 worth of new equipment for his shop. He can borrow this money at a discount rate…

A: Loan Proceeds are the amount that is disbursed from a loan, which is usually lesser than the loan…

Q: Your savings account currently has $300,000. You would like to withdraw $40,000 a year for the next…

A: The concept of time value of money will be used here.An amount of money kept in an account grows in…

Q: start saving in one year from now a fixed amount for 20 total deposits. Wha is the amount of that…

A: First we need to determine the PV of all 4 payments using the formula below:CFn = cash flow in year…

Q: If Blitzen wants to buy a $150,000 house. Blitzen is going to pay $60,000 down and make monthly…

A: When a property is finance with loan, bank charges processing fees which is on the finance amount…

Q: Nikul

A: The objective of this question is to calculate the total cost of the loan including the principal,…

Q: You plan to send your first born child for a 4-year degree with 4 annual payments. Your first…

A: According to the time value rule, a sum of money today can earn an interest amount by investing it…

Q: You can afford to pay $15,000 at the end of each of the next 30 years to repay a home loan. If the…

A: Present value of annuity is the current worth of future annual cash flows over a period of time at a…

Q: You borrowed $300,000 to build a home by taking out a 30 year loan that has an interest rate of 12%.…

A: Present Value = pv = $300,000Time = t = 30 YearsInterest Rate = r = 12%

Q: You are thinking about buying a rental property. Because of the difficulty getting a loan, you are…

A: Given data; Initial payment = $350,000 number of years = 10 monthly received cash = $1400 selling…

Q: You decide to purchase your own property. The estimated purchase price is $1,600,000. You obtain 90%…

A: given, price = $1600,000 financing obtained=90% rate (r)= 7% years (n) =25%

Q: You are thinking of buying a house beside the College which you will rent to students. You expect to…

A: Present Value can be calculated using PV function in excelPV (rate, nper, pmt, [Fv], [type])Rate The…

Q: My daughter wants to buy a new car. Here are the parameters. The car cost $12,000 with terms of 5%…

A: While taking a loan for any purpose one should evaluate the payment schedule where the requirement…

Q: ou have decided to buy a house! The house you have decided on has a list price of $380,000. You will…

A: in this we need to calculate the present value factor monthly and get monthly payments.

Q: Mike and Terri estimate that they want to buy a house for $186,000.00, and they need to make a down…

A: The objective of this question is to find out how much Mike and Terri need to invest now in order to…

Cost of Credit

The cost of credit is an extra amount that the borrower has to pay besides the loan amount. These credit charges may vary from loan to loan. The cost of credit includes interest charges, maintenance charges, and arrangement charges. Some of the costs are mandatorily collected by the lender based on the loan amount and tenure of the loan. The cost of credit is also called finance charges of the credit.