a.
To calculate: Monthly payments.
a.
![Check Mark](/static/check-mark.png)
Explanation of Solution
Formula to calculate monthly payment is as follows:
b.
To calculate: Interest and principle payments during month 1.
b.
![Check Mark](/static/check-mark.png)
Explanation of Solution
Formula to calculate interest is as follows:
Substitute equation with $80,000 for principle, 6% for interest rate to calculate interest.
Calculation of monthly payment during month 1 is as follows:
Substituting equation with 515.44 for monthly payment and $400 for interest to calculate payment during month 1.
c.
To calculate: Total principle and total interest paid over 25 years.
c.
![Check Mark](/static/check-mark.png)
Explanation of Solution
Formula to calculate total payment is as follows:
Substituting equation with $515.44 for monthly payment to calculate total payments.
Total payment is $154,632.
Formula to calculate total interest payment is as follows:
Substituting equation with $154,632 for total payments and $80,000 for principle payments to calculate total interest payment.
d.
To determine: Outstanding loan balance if the loan is repaid at the end of year 10.
d.
![Check Mark](/static/check-mark.png)
Explanation of Solution
Formula to calculate
Substituting equation with $80,000 for
e.
To calculate: Total monthly interest and principle payments through 10 years.
e.
![Check Mark](/static/check-mark.png)
Explanation of Solution
Formula to calculate total interest payment is as follows:
Substituting equation with $515.44 for monthly interest and 120 for n to calculate total payment.
Formula to calculate total principle payment is as follows:
Substituting equation with $80,000 for loan amount and $61,081.77 for present value to calculate total principle payment.
Formula to calculate total interest payment is as follows:
Substituting equation with $61,852 for total payments and $18,918.23 for total principle payment to calculate total interest payment.
f.
To calculate: Breakdown of interest and principle during month 50.
f.
![Check Mark](/static/check-mark.png)
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:
Substituting equation with $73,608.28 for outstanding loan and 0.50% for the interest rate.
Formula to calculate principle payment is as follows:
Substituting equation with $515.44 for total payment and $368.04 for interest payment to calculate principle payment.
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Chapter 4 Solutions
REAL ESTATE FINANCE W/ACCESS
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