Question

Todd Foley is applying for a $133,000 mortgage. He can get a $821 monthly payment for...

Todd Foley is applying for a $133,000 mortgage. He can get a $821 monthly payment for principal and interest and no points, or a $711 monthly payment with 2.325 points. Approximately, how many months will it take Todd to cover to cost of the discount points if he takes the lower monthly payment? (Round your answer to the nearest whole month.)
Business   Finance   
0 0
Add a commentTranscribed image text
Next >

Homework Answers

Answer #1

We can calculate the number of months for lower monthly payments with the following formula:

Number of months = (Principal amount *discount points percentage)/(Higher amount-lower amount)

                                      = (133000*2.325%)/(821-711)

                                     = 3092.25/110

                                     = 28months

0 0
Know the answer?
Your Answer:

Post as a guest

Your Name:

What's your source?

Earn Coins

Coins can be redeemed for fabulous gifts.

Log In

Sign Up

Not the answer you're looking for?
Ask your own homework help question
Similar Questions
Jake wants to buy a house for 150,000. He is considering applying for a mortgage. The...
Jake wants to buy a house for 150,000. He is considering applying for a mortgage. The lending value of the house assessed by the banker is 140,000. (a) Suppose Jake can take out an 80% conventional mortgage, what would be his required down payment? (b) What would be the down payment if Jake takes out a 90% high-ratio insured mortgage? (c) Given that Jake chooses (b) and decides to add the mortgage insurance fees (MIF) onto the mortgage loan, what...
1a. Determine your monthly payment on a 20-year $130,000 mortgage loan at 6 7/8% interest. a...
1a. Determine your monthly payment on a 20-year $130,000 mortgage loan at 6 7/8% interest. a $998.16 b $990.79 c $998.55 d $933.93 1b. You want to start a landscape business and estimate it will take $12,500 to get started. You currently have $1,500 and can deposit an additional $200 at the end of each month. If your savings plan will earn 4.5% compounded monthly, in how many months can you start your business? a 23.80 months b 48.85 months...
Oppenheimer Bank is offering a 30​-year mortgage with an APR of 4.84% based on monthly compounding....
Oppenheimer Bank is offering a 30​-year mortgage with an APR of 4.84% based on monthly compounding. With this mortgage your monthly payments would be $2,040 per month. In​ addition, Oppenheimer Bank offers you the following​ deal: Instead of making the monthly payment of $2,040 every​ month, you can make half the payment every two weeks​ (so that you will make 52/2=26 payments per​ year). With this​ plan, how long will it take to pay off the mortgage if the EAR...
Mark Sexton and Todd Story, the owners of S&S Air, Inc., were impressed by the work...
Mark Sexton and Todd Story, the owners of S&S Air, Inc., were impressed by the work Chris had done on financial planning. Using Chris's analysis, and looking at the demand for light aircraft, they have decided that their existing fabrication equipment is sufficient, but it is time to acquire a bigger manufacturing facility. Mark and Todd have identified a suitable structure that is currently for sale, and they believe they can buy and refurbish it for about $40 million. Mark,...
Assume you get a 30-year $90,000 mortgage loan at 7.25% interest. A) Calculate the monthly payment...
Assume you get a 30-year $90,000 mortgage loan at 7.25% interest. A) Calculate the monthly payment (PI). $616.66 $916.66 $316.69 $613.96 B) Based on making 360 payments of $613.96, what is the total interest of the 30 years? $125,365.74 $130,000 $131,025.60 $17,309.99 C) Use your amortization registers to calculate 1) interest for the entire 30 years and 2) balance after 360 payments of $613.96 Interest is $131,025.60 and Balance is 0 Interest is $131,021.40 and Balance is 0 Interest is...
6. Ann is willing to spend $1,500 per month on her mortgage payment. If Ann obtains...
6. Ann is willing to spend $1,500 per month on her mortgage payment. If Ann obtains a fully amortizing 30 year Fixed Rate Mortgage with monthly payments at 4.38%, how big of a mortgage can she get? 7. Ann obtains a fully amortizing 30 year Fixed Rate Mortgage with monthly payments for $1,250,000 at 4.38%. What will be Ann’s mortgage balance after 20 years of payments (ie after 240 months)? 8. Ann obtains a fully amortizing 30 year Fixed Rate...
  The following balance sheet and income statement should be used for questions #1 through #6: Kuipers,...
  The following balance sheet and income statement should be used for questions #1 through #6: Kuipers, Inc. 2001 Income Statement (OMR in millions) Net sales 9,625 Less: Cost of goods sold 5,225 Less: Depreciation 1,890 Earnings before interest and taxes 2,510 Less: Interest paid 850 Taxable income 1,660 Less: Taxes 581 Net income 1,079 Addition to retained earnings 679 Dividends paid 400 Kuipers, Inc. 12/31/00 and 12/31/01 Balance Sheet (in OMR, in millions) 2000 2001 2000 2001 Cash 1,455 260...
QUESTION 1 All of the followings are the rights and privileges of a Common Stockholders EXCEPTING:...
QUESTION 1 All of the followings are the rights and privileges of a Common Stockholders EXCEPTING: a. Voting/Proxy Rights b. Right to Dividends c. Residual Right d. Pre-emptive Right e. Right to Interest Payments 10 points    QUESTION 2 Your best friend's parents want to buy a home in the Worcester County, but they don’t know the exact amount of money that they can afford to borrow. They can afford monthly payments of $ 1,800. A friendly bank in Worcester...
The following article does a good job of breaking down the advantages/disadvantages of leasing vs. purchasing...
The following article does a good job of breaking down the advantages/disadvantages of leasing vs. purchasing vehicles: Title: Pros and Cons of Leasing vs. Buying a Vehicle Source: http://www.investopedia.com/articles/pf/05/042105.asp Buying a car can be overwhelming. In fact, the pleasure of getting a new car can be quickly clouded during the financing decision-making process and price negotiations. Besides price haggling, many car shoppers are plagued with the decision to leaseor buy. Which financing decision is right and why? This article will...
Case Study: Monica’s Handbags Monica, after completing an internship with a national apparel company, decided that...
Case Study: Monica’s Handbags Monica, after completing an internship with a national apparel company, decided that she wanted to exercise her creative design talents and her strong entrepreneurial spirit by starting her own fashion business. She conducted fundamental market research and determined that there is an unfulfilled market need for the moderate fashion handbags that she had designed at the $100 retail price point. She also learned that the independent women’s apparel stores she was targeting require a 50% retail...
ADVERTISEMENT
Need Online Homework Help?

Get Answers For Free
Most questions answered within 1 hours.

Ask a Question
ADVERTISEMENT