Question

Please show the below problem in Excel: John and Peggy would like to buy a house....

Please show the below problem in Excel:

John and Peggy would like to buy a house. They
have looked at their budget and determined that
they can afford a maximum monthly mortgage
payment of $1,100. Interest rates on 30-year,
fixed-rate mortgages currently have a nominal
annual interest rate of 7 percent with monthly
compounding (payments due at the end of each
month). Given these loan terms, what is the
maximum amount John and Peggy borrow today
to purchase a house and not exceed a monthly
payment of $1,100 on the loan? Round to the
nearest dollar.
Select one:
a. $15,714
b. $165,338
c. $127,128
d. $157,143

Business   Finance   
0 0
Add a commentTranscribed image text
Next >

Homework Answers

Answer #1

We can use the present value of the annuity to find the answer.

Where,
PVA = Present value of the annuity
A = Annuity or monthly payment
i = Interest rate in decimal form (i.e 7% = 0.07)
n = Number of years
a = Number of payments in a year

Therefore,

Therefore, the correct answer is b. $165,338

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
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...
John and Peggy recently bought a house. They financed the house with a $125,000, 30-year mortgage...
John and Peggy recently bought a house. They financed the house with a $125,000, 30-year mortgage with a nominal interest rate of 7 percent. Mortgage payments are made at the end of each month. What total dollar amount of their mortgage payments during the first three years will go towards repayment of principal?
1.) You want to buy a house in Hermosa Beach CA, but you can only afford...
1.) You want to buy a house in Hermosa Beach CA, but you can only afford to make monthly payments of $7,100. The interest rate on mortgages right now is 4.25% p.a. with monthly compounding (APR), fixed for 30 years, with monthly payments. You have $155,000 saved to use as a downpayment. What is the most that you can afford to pay for a house (ignoring closing costs, property taxes, etc..)? Answer: $1,598,265.76 2.) Under the same assumptions described in...
Estimate the maximum house value you can afford to buy. Assume the mortgage is fixed rate,...
Estimate the maximum house value you can afford to buy. Assume the mortgage is fixed rate, 30-year maturity, 80% LTV, with no points. The interest rate is quoted is 3.5% with monthly payments. The property tax rate in the city is 0.7% per year based on property value; the hazard insurance premium is 0.5% per year based on property value, and that on average you should consider $50 per month for maintenance. Determine the required monthly payment for the mortgage...
You would like to buy a house that costs $ 350,000. You have $50,000 in cash...
You would like to buy a house that costs $ 350,000. You have $50,000 in cash that you can put down on the​ house, but you need to borrow the rest of the purchase price. The bank is offering you a​ 30-year mortgage that requires annual payments and has an interest rate of 9% per year. You can afford to pay only $28,320 per year. The bank agrees to allow you to pay this amount each​ year, yet still borrow...
You would like to buy a house that costs $350,000. You have $50,000 in cash that...
You would like to buy a house that costs $350,000. You have $50,000 in cash that you can put down on the​ house, but you need to borrow the rest of the purchase price. The bank is offering you a​ 30-year mortgage that requires annual payments and has an interest rate of 7% per year. You can afford to pay only $22,970 per year. The bank agrees to allow you to pay this amount each​ year, yet still borrow $300,000....
Sam and Jenny have been married for one year, and are planning to buy a house...
Sam and Jenny have been married for one year, and are planning to buy a house in Sydney for $1 million. They will borrow $700,000 from a bank. The interest rate on the loan is 3.60% per annum, compounding monthly. The loan is for 30 years, and they have to make monthly repayments to the bank, the first payment being exactly one month from today. What is the amount of the monthly repayment? Select one: a. $3,303.78 b. $4,546.45 c....
You borrow $185,000 to buy a house. The mortgage interest rate is 7.5 percent and the...
You borrow $185,000 to buy a house. The mortgage interest rate is 7.5 percent and the loan period is 30 years. Payments are made monthly. What is your monthly mortgage payment? $1,293.55 $953.70 $1,083.78 $1,153.70 $1,398.43
You want to buy a house and will need to borrow $250,000. The interest rate on...
You want to buy a house and will need to borrow $250,000. The interest rate on your loan is 5.83 percent compounded monthly and the loan is for 20 years. What are your monthly mortgage payments?
Suppose you have decided to buy a house. The mortgage is a 30-year mortgage with an...
Suppose you have decided to buy a house. The mortgage is a 30-year mortgage with an interest rate of 7%, compounded monthly. You borrow a total of $250,000. Given this, by the time you pay off the loan, how much in total (interest + principal) would the house cost you?
ADVERTISEMENT
Need Online Homework Help?

Get Answers For Free
Most questions answered within 1 hours.

Ask a Question
ADVERTISEMENT