REAL ESTATE FINANCE W/ACCESS
REAL ESTATE FINANCE W/ACCESS
16th Edition
ISBN: 9781266527746
Author: BRUEGGEMAN
Publisher: MCG
Question
Book Icon
Chapter 4, Problem 2P

a.

Summary Introduction

To calculate: Monthly payments.

a.

Expert Solution
Check Mark

Explanation of Solution

Formula to calculate monthly payment is as follows:

Monthly payment=Principal×(MLC at 6% for 25 years)

Monthly payment=$80,000×0.006443=$515.44

b.

Summary Introduction

To calculate: Interest and principle payments during month 1.

b.

Expert Solution
Check Mark

Explanation of Solution

Formula to calculate interest is as follows:

Interest=Principle×Interest rate12

Substitute equation with $80,000 for principle, 6% for interest rate to calculate interest.

Interest=$80,000×6%12=$400

Calculation of monthly payment during month 1 is as follows:

Monthly payment=Monthly paymentInterest

Substituting equation with 515.44 for monthly payment and $400 for interest to calculate payment during month 1.

Monthly payment=$515.44$400=$115.44

c.

Summary Introduction

To calculate: Total principle and total interest paid over 25 years.

c.

Expert Solution
Check Mark

Explanation of Solution

Formula to calculate total payment is as follows:

Total payment=Monthly payment×25×24

Substituting equation with $515.44 for monthly payment to calculate total payments.

Total payment=$515.44×25×24=$154,632

Total payment is $154,632.

Formula to calculate total interest payment is as follows:

Total interest payment=Total paymentsprinciple payment

Substituting equation with $154,632 for total payments and $80,000 for principle payments to calculate total interest payment.

Total interest payment=$154,632$80,000=$74,632

d.

Summary Introduction

To determine: Outstanding loan balance if the loan is repaid at the end of year 10.

d.

Expert Solution
Check Mark

Explanation of Solution

Formula to calculate future value is as follows:

Future value=Present value(1+i)n

Substituting equation with $80,000 for present value, 0.50 for I and 120 for n to calculate future value.

Future value=$80,000(1+0.50)120=$61,081

e.

Summary Introduction

To calculate: Total monthly interest and principle payments through 10 years.

e.

Expert Solution
Check Mark

Explanation of Solution

Formula to calculate total interest payment is as follows:

Total payments=Monthly payment×n

Substituting equation with $515.44 for monthly interest and 120 for n to calculate total payment.

Total payments=$515.44×120=$61,852.80

Formula to calculate total principle payment is as follows:

Total principle payments=Loan amountPresent value of the loan at the end of 10 years

Substituting equation with $80,000 for loan amount and $61,081.77 for present value to calculate total principle payment.

Total principle payments=$80,000$61,081.77=$18,918.23

Formula to calculate total interest payment is as follows:

Total interest payments=Total paymentstotal principle payment

Substituting equation with $61,852 for total payments and $18,918.23 for total principle payment to calculate total interest payment.

Total interest payments=$61,852.80$18,918.23=$42,934.57

f.

Summary Introduction

To calculate: Breakdown of interest and principle during month 50.

f.

Expert Solution
Check Mark

Explanation of Solution

Present value of the outstanding loan at the end of month 49 is $73,608.28, formula to calculate interest payment is as follows:

Total interest payments=outstanding loan balance×interest rate

Substituting equation with $73,608.28 for outstanding loan and 0.50% for the interest rate.

Total interest payments=$73,608.28×0.50%=$368.04

Formula to calculate principle payment is as follows:

Principle payment=Total paymentInterest payment

Substituting equation with $515.44 for total payment and $368.04 for interest payment to calculate principle payment.

Principle payment=$515.44$368.04=$147.40

Want to see more full solutions like this?

Subscribe now to access step-by-step solutions to millions of textbook problems written by subject matter experts!
Students have asked these similar questions
Could you please help explain what is the research assumptions, research limitations, research delimitations and their intent? How the research assumptions, research limitations can shape the study design and scope? How the research delimitations could help focus the study and ensure its feasibility? What are the relationship between biblical principles and research concepts such as reliability and validity?
What is the concept of the working poor ? Introduction form. Explain.
What is the most misunderstanding of the working poor? Explain.
Knowledge Booster
Background pattern image
Similar questions
SEE MORE QUESTIONS
Recommended textbooks for you
Text book image
Essentials Of Investments
Finance
ISBN:9781260013924
Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher:Mcgraw-hill Education,
Text book image
FUNDAMENTALS OF CORPORATE FINANCE
Finance
ISBN:9781260013962
Author:BREALEY
Publisher:RENT MCG
Text book image
Financial Management: Theory & Practice
Finance
ISBN:9781337909730
Author:Brigham
Publisher:Cengage
Text book image
Foundations Of Finance
Finance
ISBN:9780134897264
Author:KEOWN, Arthur J., Martin, John D., PETTY, J. William
Publisher:Pearson,
Text book image
Fundamentals of Financial Management (MindTap Cou...
Finance
ISBN:9781337395250
Author:Eugene F. Brigham, Joel F. Houston
Publisher:Cengage Learning
Text book image
Corporate Finance (The Mcgraw-hill/Irwin Series i...
Finance
ISBN:9780077861759
Author:Stephen A. Ross Franco Modigliani Professor of Financial Economics Professor, Randolph W Westerfield Robert R. Dockson Deans Chair in Bus. Admin., Jeffrey Jaffe, Bradford D Jordan Professor
Publisher:McGraw-Hill Education