Essentials Of Investments
11th Edition
ISBN: 9781260013924
Author: Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher: Mcgraw-hill Education,
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Transcribed Image Text:Five years ago you took out a 30-year mortgage with an APR of 6.20%
for $206,000. If you were to refinance the mortgage today for 20 years
attan APR of 3.95%, how much would your new loan payment?
$1,159.39
$1,261.69
$1,271.51
$1,149.82
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- You buy a house for $230000, and take out a 30-year mortgage at 6% interest. For simplicity, assume that interest compounds continuously. A) What will be your annual mortgage payment? $ per year %24arrow_forwardA borrower made a constant payment mortgage loan 8 years ago for $400,000 at 12 percent interest for 30 years. 1. What is the monthly payment? 2. What is the current loan balance? 3. Assume this is homeowner has been offered a chance for refinance for the amount at the current balance for 22 years at 10.5% interest rate. What is the monthly payment if the homeowner chooses to refinance? 4. If the origination fees and closing costs are $25,500, and the costs are not financed by the lender. What is the effective cost of refinancing? Should this homeowner refinance? 5. If this homeowner plans to sell the house in 5 years, should this homeowner refinance (show your answer with the effective annual rate)? use excel to get the answers and show the formulasarrow_forwardHow much will the monthly mortgage payment be if you purchase a new condominium for $150 000 with an interest rate of 4%/a compounded monthly? The mortgage amortization period is 25 years (there is a 5% down payment that should be paid upfront)?arrow_forward
- You have decided to get a $5,000,000 balloon mortgage with the following characteristics: 5 years amortization with monthly payments, 10% interest rate, $2,500,00 balloon amount in year 5. What is the monthly payment?arrow_forwardAssume we have a $500,000 mortgage at a 3.5% original interest rate, 30-year term, and monthly payments. The interest rate can be adjusted at the end of each year, and we assume the rate increases by 0.25% after the first year. What is the monthly payment for the 4th year of the loan?arrow_forwardYou take out a 30-year fixed-rate mortgage for $300,000 with an interest rate of 1.2% (APR). What is the monthly payment?arrow_forward
- What is the value accumulated at the end of 30 years if $300 deposited at the end of each month in a mutual fund account that earns 12 percent annually during the period. Ans. A mortgage calls for monthly payments of $970.30, including interest at 7.6 percent. The current value of the mortgage is $95,258.72. Approximately how long will it take to fully amortize the mortgage? Ans. An income-producing property is priced at $550,000 and is expected to generate the following after-tax cash flows: Year 1: $50,000; Year 2: $55,000; Year 3: $60,000 and $600,000. Calculate the annual IRR for this investment opportunity. Ans.arrow_forward1. You have been approved for a mortgage for a property. The mortgage is for a 20-year period with a 7.2% annual interest rate for a total amount of $1,700,000 What is the annual payment if payments are made annually What would you put in your annual cash flow if you were paying the mortgage on a monthly basis? What will be the interest and principal payments for the second and third years of the mortgage? What will be the remaining principal balance at the end of the fifth year? Answer question using excel formulasarrow_forwardIf you have a $125,000 mortgage with a $700.00 monthly payment, payable over 30 years, what interest rate are you paying?arrow_forward
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