Essentials Of Investments
11th Edition
ISBN: 9781260013924
Author: Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher: Mcgraw-hill Education,
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Question
Dave and his Partner decide to buy a house price of $730,000. they put 20% down, and their mortgage is 4.98 compounded monthly amortized over 25 years. what is thier monthly payment?
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Step 1: Explanation of mortgage
The mortgage refers to a covered loan that is borrowed to purchase a property with the loan being covered by the property itself. It is one of the most common methods of debt financing in the market.
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- Marie and Danny Would like to buy a house for $220,000. The down payment for the mortgage is 30% of the price of the house. To earn the down payment, they invest $2500 a quarter at 6.2% compounded quarterly. They take a 30-year home mortgage for the rest of the price of the house at 7.3% compounded monthly. They make their regular monthly payments for 5 years, then decide to pay $2000 per month. How much is the down payment? How long will it take Marie and Danny to earn the down payment if they invest $2500 a quarter at 6.2% compounded quarterly? How much is the loan for the mortgage? What is the regular monthly payment? What is the unpaid balance when they begin paying the $2000? How many payments of $2000 will it take to pay off the loan? Give the answer correct to wo decimal places. How much interest will they save by paying the loan this way? Use your answer from #6 to find.arrow_forwardWhiskers wants to buy a $600,000 house. She plans to pay $200,000 down and make monthly payments for 20 years. If the loan has an interest rate of 5% monthly with 3 points, what is the true interest rate?arrow_forwardMateo and Klaus have now saved up their down payment to buy a home, but they still need to borrow to cover the rest. For the home they want this will require a mortgage of $585,000 to cover the remaining amount and they're not sure whether they could afford the monthly loan payments. The bank has offered them a mortgage interest rate of 5.15%, compounded semi-annually. How much would they have to be able to afford to pay each month in order to pay off their mortgage in 25 years? [Blank-1]What is the total amount of interest that would be paid to the lender after 25 years of payments? [Blank-2]What if Mateo and Klaus could only afford a monthly payment of $2,500? What would be the maximum mortgage amount they could afford to borrow from the bank, if all the other conditions were the same? [Blank-1]What is the total amount of interest that would be paid to the lender over 25 years? [Blank-2]arrow_forward
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