Essentials Of Investments
11th Edition
ISBN: 9781260013924
Author: Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher: Mcgraw-hill Education,
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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.
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