12. Exactly six years ago, Xen borrowed $418,000 to buy a house. The fixed annual interest rate on the 30- year loan is 6.75% p.a. The loan requires monthly payments, the first payment was made exactly one month after Xen bought the house, and Xen has made every payment for the past six years on time. Because interest rates have recently decreased, Xen is considering refinancing the loan. Assuming that Xen just made the 84 payment on the loan, what is the remaining balance on the loan (i.e., the amount that Xen would need to refinance to completely pay off the current loan)? a. $295,236.60 b. $379,491.64 c. $371,367.55 d. $366,147.84 e. $291,783.29

12. Exactly six years ago, Xen borrowed $418,000 to buy a house. The fixed annual interest rate on the 30- year loan is 6.75% p.a. The loan requires monthly payments, the first payment was made exactly one month after Xen bought the house, and Xen has made every payment for the past six years on time. Because interest rates have recently decreased, Xen is considering refinancing the loan. Assuming that Xen just made the 84 payment on the loan, what is the remaining balance on the loan (i.e., the amount that Xen would need to refinance to completely pay off the current loan)? a. $295,236.60 b. $379,491.64 c. $371,367.55 d. $366,147.84 e. $291,783.29

Essentials Of Investments

11th Edition

ISBN:9781260013924

Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.

Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.

Chapter1: Investments: Background And Issues

Section: Chapter Questions

Problem 1PS

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David borrowed R911 012,00 to refurbish his holiday home. The loan requires monthly repayments over 12 years. When he borrowed the money, the interest rate was 12,4% per annum, compounded monthly, but five years later the bank increased the annual interest rate to 13,9%, in line with market rates. After five years, the present value of the loan is R682 081,77. With the new interest rate, his monthly payments (rounded to the nearest rand) will increase by: A. R558 B. R3 649 c. R12 745 D. R7 705
8. Your brother-in-law borrowed $2,000 from you 4 years ago and thendisappeared. Yesterday he returned and expressed a desire to pay back the loan,including the interest accrued. Assuming that you had agreed to charge him 10%annual interest and he wishes to make 5 equal annual payments beginning one yearfrom now, how much will he need to pay you annually in order to pay off thedebt? (Assume that the loan continues to accrue interest at 10% per year.)
14) John borrowed $12,000 to buy a new car and expects to pay $564.87 per month for the next 2 years to pay off the loan. What is the loan's rate of interest?
Several years ago, Bill Smith borrowed $125,000 to buy his house. He has a 15 year, monthly payment mortgage with an interest rate of 8.75 percent per annum. Bill is thinking about refinancing his house so he would like to know the payoff on his current loan. Assuming that he just made payment number 94, compute the payoff on Bill's loan. Round your answer to 2 decimal places; record your answer without commas and without a dollar sign.
(5) Arlen buys a home for $328,000 and makes a down payment of $33,000. The balance he finances with a fifteen-year mortgage with monthly payments and an annual effective interest rate of 5.8%. There will be level payments followed by a final slightly reduced payment. Calculate the amount of interest that Arlen pays in the first five years of the loan.
1. Your friend is taking out a mortgage for $217,000 at 8.25% repayable with quarterly payments over 30 years. She respects your financial expertise and asks "how many payments will I have to make before I reduce the principal balance by 30% its original amount." You pull out your calculator, and tell her the number of payments she'll make to reduce the balance by 30% is: 2. You made a $6000 deposit last year in an account that earns 11% interest compounded quarterly. Compute how much the total interest-on-interest is when you close the account exactly 6 years from today.
Kevin Tutumbo of Terre Haute, Indiana, has owned his home for 15 years and expects to live in it for at least five more. He originally borrowed $130,000 at 6.5 percent interest for 30 years to buy the home. He still owes $93,000 on the loan. Interest rates have since fallen to 5.5 percent, and Kevin is considering refinancing the loan for 15 years. He would have to pay 2 points on the new loan with no prepayment penalty on the current loan. What is Kevin's current monthly payment? Round Estimating Mortgage Loan Payments for Principal and Interest in your intermediate calculations to four decimal places. Use Table 9-4. Round your answer to the nearest cent. Calculate the monthly payment on the new loan. (Note: The points on the new mortgage are not included in the mortgage amount.) Round Estimating Mortgage Loan Payments for Principal and Interest in your intermediate calculations to four decimal places. Use Table 9-4. Round your answer to the nearest cent.
7. Joan Tanaka borrows $80,000 at 14 percent interest toward the purchase of a vacation home. Her mortgage is for 25 years. a. How much will her annual payments be? (home payments are usually on a monthly basis, but we shall do our analysis on an annual basis for ease of computation.) b. How much interest will she pay over the life of the loan?
Joe Levi bought a home in Arlington Texas for $150,000. He put down 20% and obtained a mortgage for 15 years at 5 1/2% interest. 1) What is Joe's monthly payment? 2) What is the TOTAL cost of interest for this loan? 3) If the interest rate increases to 6 1/2%, what is the difference in the TOTAL interest costs over the life of this loan?
You bought a house exactly 16 years ago. You borrowed money under a 30 year mortgage from Wintrust to buy the house. Your monthly payment is $300. The loan has a fixed rate of 4% per year. I want to pay off the bank and be debt free. How much must you pay the bank to extinguish your loan?
A few years back, Dave and Jana bought a new home. They borrowed $230,415 at an annual fixed rate of 5.49% (15-year term) with monthly payments of $1,881.46. They just made their 25th payment, and the current balance on the loan is $208,555.87. Interest rates are at an all-time low, and Dave and Jana are thinking of refinancing to a new 15-year fixed loan. Their bank has made the following offer: 15-year term, 2.25%, plus out-of-pocket costs of $2,585. The out-of-pocket costs must be paid in full at the time of refinancing. Build a spreadsheet model to evaluate this offer. The Excel function =PMT(rate, nper, pv, fv, type) calculates the payment for a loan based on constant payments and a constant interest rate. The arguments of this function are as follows. rate = the interest rate for the loan nper = the total number of payments pv = present value (the amount borrowed) fv = future value [the desired cash balance after the last payment (usually 0)] type =…
A few years back, Dave and Jana bought a new home. They borrowed $230,415 at an annual fixed rate of 5.49% (15-year term) with monthly payments of $1,881.46. They just made their 45th payment, and the current balance on the loan is $208,555.87. Interest rates are at an all-time low, and Dave and Jana are thinking of refinancing to a new 15-year fixed loan. Their bank has made the following offer: 15-year term, 3.0%, plus out- of-pocket costs of $2,937. The out-of-pocket costs must be paid in full at the time of refinancing. Build a spreadsheet model to evaluate this offer. The Excel function: =PMT(rate, nper, pv, fv, type) calculates the payment for a loan based on constant payments and a constant interest rate. The arguments of this function are: rate the interest rate for the loan nper = the total number of payments pv = present value (the amount borrowed) fv = future value [the desired cash balance after the last payment (usually 0)] type = payment type (0 = end of period, 1 =…

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