Question

THE FOLLOWING INFORMATION WILL BE USED TO ANSWER THE NEXT FOUR QUESTIONS. You are considering the...

THE FOLLOWING INFORMATION WILL BE USED TO ANSWER THE NEXT FOUR QUESTIONS.

You are considering the following options on a $250,000 mortgage:

1) A 15-year 3% fixed-rate; 0 points

2) A 15-year 2% fixed rate with 2 points

What is the net present value of paying the points if you plan to keep the mortgage for the full 15 years? Use the 2% interest rate to discount the monthly savings.

Group of answer choices

$13,287.24

$10,000

$0

$18,287.24

Business   Finance   
0 0
Add a commentTranscribed image text
Next >

Homework Answers

Answer #1

....

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
You are considering the following options on a $250,000 mortgage: 1) A 15-year 3% fixed-rate; 0...
You are considering the following options on a $250,000 mortgage: 1) A 15-year 3% fixed-rate; 0 points 2) A 15-year 2% fixed rate with 2 points What is the net present value of paying the points if you plan to keep the mortgage for the full 15 years? Use the 2% interest rate to discount the monthly savings. $13,287.24 $10,000 $0 $18,287.24
You are considering the following options on a $250,000 mortgage: 1) A 15-year 3% fixed-rate; 0...
You are considering the following options on a $250,000 mortgage: 1) A 15-year 3% fixed-rate; 0 points 2) A 15-year 2% fixed rate with 2 points How long must you stay in the house to make it worthwhile to pay the points if the payment savings is invested monthly? [Assume that the only savings from paying the points come from the difference in monthly payments between the two options; i.e. ignore the savings from differences in o/s balance at the...
You are considering the following options on a $250,000 mortgage: 1) A 15-year 3% fixed-rate; 0...
You are considering the following options on a $250,000 mortgage: 1) A 15-year 3% fixed-rate; 0 points 2) A 15-year 2% fixed rate with 2 points If you plan to repay the mortgage after five years, you will have to pay _______________ to retire the mortgage if you choose option 1, and you will have to pay _________________ to retire the mortgage if you chose option 2. Group of answer choices $178,794.19 ; $174,840.74 $96, 081.01; $91,784.12 $146,413; $153,473.80 $250,000;...
Suppose that you are borrowing $1,000,000 to buy a beach house. The lender offers you the...
Suppose that you are borrowing $1,000,000 to buy a beach house. The lender offers you the following options: Option 1: A 15-year fixed conventional mortgage at a nominal rate of 5.0% and zero discount points. The mortgage is payable monthly. Option 2: A 15-year fixed conventional mortgage at a rate of 4.75% and 2 discount points. The mortgage is payable monthly. Questions (answer all three parts and document any calculations): A) What is the monthly payment required for Option 1?...
You make $250,000 per year with an annual salary increase of 2%. You are planning to...
You make $250,000 per year with an annual salary increase of 2%. You are planning to buy a house. You have $130,000 in your savings account. The appraisal value for the house is $600,000. After exhaustive shopping for a mortgage, a bank offered you these options: 1. A mortgage for 30 years, 5.00% fixed (compounded monthly), 0-points (no deduction in interest rate), with 20% down payment; or 2. A mortgage for 20 years, 4.50% fixed (compounded monthly), 0-points (no deduction...
you are considering the purchase of a $140,000 home and making a 20% down payment.  You can...
you are considering the purchase of a $140,000 home and making a 20% down payment.  You can obtain a 15 year mortgage at 6.50%, but you can get a 5.85% rate by paying 2 discount points. 1.What are your monthly payments if you do NOT pay the points?' 2. Assuming payments are reinvested, what is the breakeven in months? 3.What are your monthly payments if you pay the points?
A homeowner can obtain a $250,000, 30-year fixed-rate mortgage at a rate of 6.0 percent with...
A homeowner can obtain a $250,000, 30-year fixed-rate mortgage at a rate of 6.0 percent with zero points or at a rate of 5.5 percent with 2.25 points. If you will keep the mortgage for 30 years, what is the net present value of paying the points (to the nearest dollar)? please show in excel
You are borrowing $250,000 to buy a house, using a standard, 30 year mortgage. your mortgage...
You are borrowing $250,000 to buy a house, using a standard, 30 year mortgage. your mortgage lender offers a 5.50% mortgage with no points, or a 5.20% mortgage with X points. You plan on living in the house for exactly 60 months, paying only the required payment each month, and without refinancing your mortgage. What points wilk make yku indifferent between the two mortgages. Use the 5.50% rate to discount cash flows between the two options.
Use this information for the next 3 questions: Lugar Industries is considering an investment in a...
Use this information for the next 3 questions: Lugar Industries is considering an investment in a new machine with the following information: Machine cost 250,000 Salvage value 50,000 Life 5 years Working Capital $0 (no working capital needed) Net operating expense savings: End of Year 1 $ 50,000 End of Year 2 $ 90,000 End of Year 3 $110,000 End of Year 4 $120,000 End of Year 5 $120,000 WACC 10% Tax rate 40% Assumed salvage value of the machine...
You just took a fixed-rate mortgage for $250,000 at 4.50% for 30 years, monthly payments, two...
You just took a fixed-rate mortgage for $250,000 at 4.50% for 30 years, monthly payments, two discount points. Before you make any payments you receive a nice raise so you plan to pay an extra $160 per month on top of your normal payment. A. (1 pt) How many monthly payments do have to make at the higher payment to fully amortize the loan? B. (1 pt) What is your net interest savings over the life of the loan, assuming...
ADVERTISEMENT
Need Online Homework Help?

Get Answers For Free
Most questions answered within 1 hours.

Ask a Question
ADVERTISEMENT