Question
Just answer the last two questions (question e&f) Question 2 (12 marks) Rick the developer is...
Just answer the last two questions (question e&f)
Question 2 Rick the developer is having a hard time
selling a house listed at
$300,000. Being desperate he decides to offer financing: a $300,000
super "sub-prime" 25-
year mortgage at a mere quoted 6% (annual yield). Payments are
monthly. (When calculating
the effective interest rate, use 8 decimals)
(a) . What is the monthly payment Rick is asking the
purchaser to make? Hint:
calculate monthly effective interest rate
Rick is so desperate that he is also willing to sell the house for
$150,000 cash today. Hank can
get financing from the bank at a mortgage rate of 8% (annual
yield).
(b) What is the monthly payment on this bank mortgage for
$150,000 amortized
over 25 years?
(c) (1 mark) Which of the above mortgages should Hank take?
(d) (2marks) How much Hank would save in present time?
Hank’s monthly salary is $3,000 and by law he cannot pay more than
his one-third income as
installment.
(e) How many years it would take Hank to pay the mortgage
loan if he decided to
take the loan from the bank?
(f) What is the number of years that minimize the
installment and how much would
be the installment?
Homework Answers
Answer #1
Not the answer you're looking for?
Similar Questions
This is my third hard questions about financial accounting The business owners, Jame claimed to have...
This is my third hard questions about financial accounting
The business owners, Jame claimed to have enough money and then
he decided to buy a house, purchases will take out a $300,000
mortgage for 40 years at 8%, compounded monthly.
a/ How much is ’s Jame monthly mortgage payment?
b/ How much sooner would Jame pay off his mortgage if he made an
additional $200 payment each month?
Mr. Khalid Al Bulushi is interested to buy the house at RO 105,000. He approached the...
Mr. Khalid Al Bulushi is interested to buy the house at RO
105,000. He approached the Bank Dhofar for a home loan. The bank
has approved the loan application for a 20-year fixed-rate loan at
6% annual interest compounded annually and asked him to make 10% of
property cost as a down payment.
a) What would be the monthly installment Mr. Khalid needs to
pay?
b) What will be the total deferred payment Khalid has to
pay?
c) Why did...
Aya and Harumi would like to buy a house and their dream house costs $500,000. They...
Aya and Harumi would like to buy a house and their dream house
costs $500,000. They have $50,000 saved up for a down payment but
would still need to take out a mortgage loan for the remaining
$450,000 and they’re not sure whether they could afford the monthly
loan payments. The bank has offered them an interest rate of 4.25%,
compounded monthly. How much would they have to be able to afford
to pay each month in order to pay...
5. Steven has just deposited $ 10,000 in a bank account that has a 12...
5. Steven has just deposited $ 10,000 in a bank
account that has
a 12 percent monthly interest rate.
How much will there be in the
account within three years?
6. Suppose you borrow $ 10,000 for four years at 18
interest cent. How much will the monthly payment of the
loan?
7. You want to withdraw $ 3,000 annually for three years, if the
rate of
interest is 8
percent biannually, how...
Please Answer all question please don't answer just one question if you can't all. Answer all...
Please Answer all question please don't answer just one question
if you can't all. Answer all please.
6. Exxon Mobil has preferred shares with a yield
of 5.14%. If the quarterly dividend is $1.92, what is the value of
a share?
7. You have accumulated $1,145 in debt by buying
things on Amazon during quarantine. The minimum monthly
payment is $22, If you make only the minimum payment, it will take
you 94 months to pay it off. How much total...
John is about to make his dream of a house of his own come true. For...
John is about to make his dream of a house of his own come true.
For years he has been saving for this moment and now, after months
of searching for a suitable house for his family of four, he has
found a spacious three-bedroom detached house with a little garden
just outside of Dubai and is about to sign the purchase contract.
He feels comfortable with the financing arrangement he has made.
Requiring a 10 percent down payment on...
1) Jens just took out a loan from the bank for 79,702 dollars. He plans to...
1) Jens just took out a loan from the bank for 79,702 dollars.
He plans to repay this loan by making a special payment to the bank
of 4,130 dollars in 4 years and by also making equal, regular
annual payments of X for 8 years. If the interest rate on the loan
is 12.57 percent per year and he makes his first regular annual
payment in 1 year, then what is X, Jens’s regular annual
payment?
2) Theo just...
A lakefront house in Kingston, Ontario, is for sale with an asking price of $457,700. The...
A lakefront house in Kingston, Ontario, is for sale with an
asking price of $457,700. The real estate market has been quite
active, so the house will almost certainly attract several offers,
and may sell for more than the asking price. Charlie is very eager
to purchase this house, but is concerned that he may not be able to
afford it. He has $126,000 available for a down payment, and can
pay up to $1,790 per month on a mortgage...
Using Microsoft Excel: Suppose you are in the market for a new car worth $22,000. You...
Using Microsoft Excel: Suppose you are in the market for a new
car worth $22,000. You are offered a deal to make a $2,000 down
payment now and to pay the balance in equal end-of-month payments
of $505.33 over a 48-month period. Consider the following
situations.
(a) Instead of going through the dealer’s financing, you want to
make a down payment of $1,800 and take out an auto loan from a bank
at 9.2% compounded monthly. What would be your...
To answer the questions below: Include a statement at the end of each section. Describe the...
To answer the questions below:
Include a statement at the end of each section. Describe the
meaning of the numbers found.
For instruction on how to submit the assignment review page 7 of
the course outline.
1. [Class 9 - 21 Points] Julie has returned from her overseas
posting and taken a total of $30,000 in savings and used it for a
down payment on a house. The house costs $285,000, so the remaining
$255,000 will be financed through a...
ADVERTISEMENT
Need Online Homework Help?
Get Answers For Free
Most questions answered within 1 hours.
ADVERTISEMENT
Active Questions
asked 20 minutes ago
asked 51 minutes ago
asked 51 minutes ago
asked 1 hour ago
asked 1 hour ago
asked 1 hour ago
asked 1 hour ago
asked 2 hours ago
asked 2 hours ago
asked 2 hours ago
asked 2 hours ago
asked 2 hours ago