Conor is comparing two potential housing options. Conor plans to stay inthe home for 4 years, after which he plans to move again. Conor earns12% annually on his other investments. He determines the followinginformation about each option:OPTION 1: Purchase a home• Purchase a $270,000 home with a 30-year fixed mortgage• Loan amount = $270,000 (100% financing)• Annual mortgage interest rate = 6.00%Monthly mortgage payments = $1,618.79• Additional monthly costs (insurance, taxes, maintenance) = $350.00• Real estate growth rate = 5% annually. What is the present value of Option 1 assuming the home is expected toincrease in value 5% annually over the 4 years, and Conor earns 12%annually on his other investments?Make your answer a positive number, and round to the nearest dollar ifnecessary.$

Present value is the equivalent of the future prices based on the time value of the money based on…

Conor is comparing two potential housing options. Conor plans to st the home for 4 years, after which he plans to move again. Conor ear 12% annually on his other investments. He determines the following information about each option: OPTION 1: Purchase a home • Purchase a $270,000 home with a 30-year fixed mortgage Loan amount = $270,000 (100% financing)

Conor is comparing two potential housing options. Conor plans to st the home for 4 years, after which he plans to move again. Conor ear 12% annually on his other investments. He determines the following information about each option: OPTION 1: Purchase a home • Purchase a $270,000 home with a 30-year fixed mortgage Loan amount = $270,000 (100% financing)

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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Similar questions

Brad decides to purchase a $295,000$⁢house. He wants to finance the entire balance. He has received an APR of 3.1% for a 20-year mortgage. Over the course of the loan, how much interest will Brad pay? Round your answer to the nearest hundredth.
Josh is taking out a mortgage for $161,000 to buy a new house and is deciding between the offers from two lenders. He wants to know which one would be the better deal over the life of the mortgage loan, and by how much. (a) His credit union has offered him a 40-year mortgage loan at an annual interest rate of 4.1%. Find the monthly payment. (b) A bank has offered him a 15-year mortgage loan at an annual interest rate of 3.8%. Find the monthly payment. (c) Suppose Josh pays the monthly payment each month for the full term. Which lender's mortgage loan would have the lowest total amount to pay off, and by how much? • Credit union The total amount paid would be $____ less than to the bank. • Bank The total amount paid would be $____ less than to the credit union.
A couple who wants to purchase a home with a price of $290,000 has $50,000 for a down payment. If they can get a 20-year mortgage at 7% per year on the unpaid balance, find each of the following. (a) What will be their monthly payments? (b) What is the total amount they will pay before they own the house outright? (c) How much interest will they pay over the life of the loan? (a) Their monthly payments would be approximately $. (Do not round until the final answer. Then round to the nearest hundredth as needed.)
Brad decides to purchase a $250,000 house. He wants to finance the entire balance. He has received an APR of 3.1% for a 30year mortgage. Over the course of the loan, how much interest will Brad pay? Round your answer to the nearest hundredth.
You're moving to a new location and decide to purchase a new home. You find the house of your dreams for $200,000.00. You are approved for a zero down payment mortgage for 30 years at a 5% APR. What is your monthly payment? O $1,073.64 $107.36 O $10,736.40 O $1,111.11 O $1,095.59
Peter and Julia decide on a 15 year mortgage valued at $165,000. They are doing some financial comparisons of two similar loan options. Loan A: 4.5% annual interest rate resulting in monthly payments of $1262.24 Loan B: 4% annual interest rate resulting in monthly payments of $1220.49 What is the total payback for each loan? (Assume only the minimum payment is made each month.) How much more interest will Peter and Julia pay if they choose Loan A? Provide your answer below: Loan A =$ Loan B =$ They will pay $ more interest if they choose Loan A.
Please show how to solve questions a. and b. using an excel spreadsheet, and please show the excel formulas. Carly decides to buy a house with price of $450,000. Carly puts 20% down payment and consider a 30-year fixed rate mortgage to pay the remaining balance. The lender offers Carly two choices of the mortgage with monthly payments in the table provided. Suppose that the origination cost is $6,000. a. If Carly holds the loan for 30 years, what is the effective cost for each choice? b. How about the effective cost for each choice if the loan will only be outstanding for 5 years (60 months) (the borrower will pay off the loan at the end of 60 months)?
Your classmate tells you the details of the great deal he got on his mortgage: 30-year 1.1% fixed rate with a 20% down payment a.)If his new home costs $136,000, what is his down payment? b.)How much is he going to borrow to buy the house (assuming he only has the money to make the down payment from the previous part)? c.)Use Excel’s PMT function to determine how much his monthly payments would be. d.)How much will he pay in interest over the lifetime of this mortgage?
Tobin is buying a new apartment. He can afford a mortgage payment of $1990 a month, and a down payment of $11000. He obtained a 16-year loan at 6.05% compounded monthly. Use Excel to determine what the most expensive apartment he can buy under these terms. How much will Tobin pay in interest over the 16-year years? Apartment price = $ Interest paid = $
Dan is considering borrowing $500,000 to purchase a new condo. Based on that information, answer the following questions calculate the monthly payment needed to amortize an 8% fixed rate 30-year mortgage loan
You have been shopping for a new home. You have the choice of financing for your $300,000. You can choose either a 4.5% 30 year loan or a 5% 15 year loan. A) Assuming you take out the mortgage at age 30 - prepare the amortization schedule for each situation. B) Highlight the payment period when the interest flips on the 15 year note? On the 30? C) At age 45 when you pay off the 15 year mortgage, you decide to invest your previous monthly mortgage payment in a mutual fund earning 6% annually. What is the value of this investment at age 62 (17 years later)?
Mr. Smith is purchasing a $ 180000 house. Thedown payment is 20 % of the price of the house.He is given the choice of two mortgages:a) a 30-year mortgage at a rate of 6 %.Find(i) the monthly payment: $(ii) the total amount of interest paid: $b) a 15-year mortgage at a rate of 6 %.Find(i) The monthly payment: $(ii) the total amount of interest paid: $

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