Question

You want to buy a house that costs $210,000. You have $21,000 for a down payment, but your credit is such that mortgage companies will not lend you the required $189,000. However, the realtor persuades the seller to take a $189,000 mortgage (called a seller take-back mortgage) at a rate of 5%, provided the loan is paid off in full in 3 years. You expect to inherit $210,000 in 3 years, but right now all you have is $21,000, and you can afford to make payments of no more than $22,000 per year given your salary. (The loan would call for monthly payments, but assume end-of-year annual payments to simplify things.)

- If the loan was amortized over 3 years, how large would each annual payment be? Do not round intermediate calculations. Round your answer to the nearest cent. Could you afford the payment?

If the loan was amortized over 30 years, what would each payment be? Do not round intermediate calculations. Round your answer to the nearest cent. Could you afford the payment?- To satisfy the seller, the 30-year mortgage loan would be written as a balloon note, which means that at the end of the third year, you would have to make the regular payment plus the remaining balance on the loan.

What would the loan balance be at the end of Year 3? Do not round intermediate calculations. Round your answer to the nearest cent.

What would the balloon payment be? Do not round intermediate calculations. Round your answer to the nearest cent.

Answer #1

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You want to buy a house that costs $270,000. You have $27,000
for a down payment, but your credit is such that mortgage companies
will not lend you the required $243,000. However, the realtor
persuades the seller to take a $243,000 mortgage (called a seller
take-back mortgage) at a rate of 6%, provided the loan is paid off
in full in 3 years. You expect to inherit $270,000 in 3 years, but
right now all you have is $27,000, and...

You have saved $5,000 for a down payment on a new car. The
largest monthly payment you can afford is $450. The loan will have
a 9% APR based on end-of-month payments.
What is the most expensive car you can afford if you finance it
for 48 months? Do not round intermediate calculations. Round your
answer to the nearest cent.
$
What is the most expensive car you can afford if you finance it
for 60 months? Do not round...

You have saved $3,000 for a down payment on a new car. The
largest monthly payment you can afford is $350. The loan will have
an 8% APR based on end-of-month payments.
What is the most expensive car you can afford if you finance it
for 48 months? Do not round intermediate calculations. Round your
answer to the nearest cent.
What is the most expensive car you can afford if you finance it
for 60 months? Do not round intermediate...

You have saved $3,000 for a down payment on a new car. The
largest monthly payment you can afford is $300. The loan will have
a 10% APR based on end-of-month payments.
A.What is the most expensive car you can afford if you finance
it for 48 months? Do not round intermediate calculations. Round
your answer to the nearest cent.
B. What is the most expensive car you can afford if you finance
it for 60 months? Do not round...

PV AND LOAN ELIGIBILITY
You have saved $4,000 for a down payment on a new car. The
largest monthly payment you can afford is $350. The loan will have
a 8% APR based on end-of-month payments.
What is the most expensive car you can afford if you finance it
for 48 months? Do not round intermediate calculations. Round your
answer to the nearest cent.
$
What is the most expensive car you can afford if you finance it
for 60...

PV AND LOAN ELIGIBILITY
You have saved $5,000 for a down payment on a new car. The
largest monthly payment you can afford is $400. The loan will have
a 8% APR based on end-of-month payments.
What is the most expensive car you can afford if you finance it
for 48 months? Do not round intermediate calculations. Round your
answer to the nearest cent.
What is the most expensive car you can afford if you finance it
for 60 months?...

10.
PV AND LOAN ELIGIBILITY
You have saved $5,000 for a down payment on a new car. The
largest monthly payment you can afford is $500. The loan will have
a 9% APR based on end-of-month payments.
What is the most expensive car you can afford if you finance it
for 48 months? Do not round intermediate calculations. Round your
answer to the nearest cent.
$
What is the most expensive car you can afford if you finance it
for...

Problem 5.26
PV AND LOAN ELIGIBILITY
You have saved $3,000 for a down payment on a new car. The
largest monthly payment you can afford is $400. The loan will have
a 8% APR based on end-of-month payments.
a. What is the most expensive car you can afford if you finance
it for 48 months? Do not round intermediate calculations. Round
your answer to the nearest cent.
b. What is the most expensive car you can afford if you finance...

You have saved $5,000 for a down payment on a new car. The
largest monthly payment you can afford is $400. The loan will have
a 15% APR based on end-of-month payments. What is the most
expensive car you can afford if you finance it for 48 months? For
60 months? Do not round intermediate calculations. Round your
answers to the nearest cent.

Annuity Payment and EAR
You want to buy a car, and a local bank will lend you $30,000.
The loan would be fully amortized over 3 years (36 months), and the
nominal interest rate would be 6% with interest paid monthly. What
is the monthly loan payment? Do not round intermediate
calculations. Round your answer to the nearest cent.
$
What is the loan's EFF%? Round your answer to two decimal
places.
%

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