Concept explainers
Mortgage Rates The following table is taken from the website of Freddie Mac. It shows rates for 30-year fixed-rate mortgages since
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a. Explain in practical terms the meaning of
b. Use the table to estimate the value of
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Chapter 1 Solutions
EBK FUNCTIONS AND CHANGE: A MODELING AP
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- As one of the loan officers for Grove Gate Bank, calculate the monthly principal and interest, PI (in $), using this table and the monthly PITI (in $) for the mortgage. (Round dollars to the nearest cent.) AmountFinanced InterestRate Termof Loan(years) MonthlyPI AnnualPropertyTax AnnualInsurance MonthlyPITI $127,700 6.75% 15 $ $2,370 $1,325 $arrow_forwardRural Global Co. makes many loans to individuals by discounting the face value of the loan. The borrower gets the proceeds. For the loan below, determine the amount of the discount, the procceds, and the actual interest rate which is based on the procceds rather than the face value. Use a 365-day year and compute actual rates to the nearest 1/100 of a percent. Actual Face Discount Discount Interest Value Rate Time Amount Proceeds Rate $5,300 9% 200 daysarrow_forwardA student loan allows you to borrow now, and pay after you graduate. Consider a loan with a 7% annual percentage rate. No payments are due until after you graduate, but interest accrues (i.e. is added to the balance) monthly. Suppose you borrow $25,000 now. How much will you owe (including interest) at the end of 4 years? Show your work by creating a table with interest accrued each period.arrow_forward
- Go to Yahoo!Finance and download data at the MONTHLY frequency for the stock Apple Inc. with ticker AAPL with starting date January 1, 1990 and end date August 4, 2016. Use the ADJUSTED CLOSING PRICE to create the monthly RETURNS that are the percentage change of the adjusted closing price (NB: make sure to sort first the price from OLDEST TO NEWEST; the percentage return is 100 times the price change between the current and previous month divided by the price in the previous month). Based on the time series of the stock return, answer the following questions (NB: you should have 319 monthly returns): Calculate the sample mean or average of the stock return: Calculate the sample standard deviation of the stock return: !!! For the questions below, use the values for the mean and std. dev. that you typed above (only the first 2 decimals)!!! Assuming that the returns follow a normal distribution: Calculate the P(return > 2.21): Calculate the P(-12.37 x) = 0.9704: Calculate the lower…arrow_forwardWhat factors determine the amount of interest earned on a fixed principal (such as a lump-sum deposit into an account)? Select all that apply. A. Interest rate B. Frequency of periodic payments C. Number of compounding periods D. None of the abovearrow_forwardJames has a mortgage of $96,500 at 4% for 15 years. The property taxes are $3,900 per year, and the hazard insurance premium is $764.50 per year. Find the monthly PITI payment (in $). (Round your answer to the nearest cent. Use this table as needed.)arrow_forward
- Find the new balance, assuming that the bank charges 1 1 2 1 1/2 percent per month on the unpaid balance. PreviousBalance Payment NewPurchases $300 $20 $80 STEP 1: Find the unpaid balance after the payment is made on the previous balance.$ STEP 2: Calculate the amount of charge incurred by the unpaid balance.$ STEP 3: Find the new balance.$arrow_forwardThe credit card with the transactions described on the right uses the average daily balance method to calculate interest. The monthly interest rate is 1.5% of the average daily balance. Calculate parts a-d using the statement on the right. Transaction Description Previous balance, $6230.00 March 1 Billing date March 5 Payment March 7 Charge: Restaurant March 12 Charge: Groceries March 21 Charge: Car Repairs March 31 End of billing period Payment Due Date: April 9 Transaction Amount $350.00 credit $40.00 $70.00 $210.00 a. Find the average daily balance for the billing period. Round to the nearest cent. The Taverage daily balance for the billing period is $ (Round to the nearest cent as needed.)arrow_forwardThe activity on Denise Helling's Master Card account for one billing period is shown below. Find the average daily balance and the finance charge if the billing period is November 11 1 through December 10, the previous balance was $562.84, and the annual interest rate is 22%. $43.95 $100.00 November 16 Restaurant November 23 Payment Clothing December 4 $36.29arrow_forward
- You have a credit card that charges an interest rate of 18.35% compounded monthly. The table below shows your activity for the month of December. Date Activity December 1 Beginning Balance December 6 Purchase December 13 Payment December 16 Purchase December 25 Purchase December 29 Purchase December 31 Ending Balance Amount Balance 560.21 45.01 605.22 355.22 447.62 463.01 507.32 507.32 -250.00 92.40 15.39 44.31 What is the average daily balance for this account? What is the finance charge for the month of December?arrow_forwardA perpetuity costs $302.07 and makes annual payments at the end of the year. The perpetuity pays $1 at the end of year 1. $2 at the end of year 2, ..., and Sn at the end of year n, After year n, the payments remain constant at n. The annual effective interest rate is 4.5%. Calculate n.arrow_forward
- Glencoe Algebra 1, Student Edition, 9780079039897...AlgebraISBN:9780079039897Author:CarterPublisher:McGraw Hill