r purchases a property for $200,000 and pays 20% of tye sale price as a down payment. The owner provides a purchase money mortgage at 6% per annum, interest-only monthly payments with a ballon payment in 60 months. In the 40th month, the borrower is approached to sell the property for $240,000. How much equity does the borrower have and what will his sal

r purchases a property for $200,000 and pays 20% of tye sale price as a down payment. The owner provides a purchase money mortgage at 6% per annum, interest-only monthly payments with a ballon payment in 60 months. In the 40th month, the borrower is approached to sell the property for $240,000. How much equity does the borrower have and what will his sal

Principles of Accounting Volume 2

19th Edition

ISBN:9781947172609

Author:OpenStax

Publisher:OpenStax

Chapter11: Capital Budgeting Decisions

Section: Chapter Questions

Problem 8MC: Grummet Company is acquiring a new wood lathe with a cash purchase price of $80,000. The Wood Master...

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Grummet Company is acquiring a new wood lathe with a cash purchase price of $80,000. The Wood Master Industries (the manufacturer) has agreed to accept $23,500 at the end of each of the next 4 years. Based on this deal, how much interest will Grummet pay over the life of the loan? A. $94,000 B. $80,000 C. $23,500 D. $14,000
6. Assume an elderly couple owns a $140,000 home that is free and clear of mortgage debt. A reverse annuity mortgage (RAM) lender has agreed to a $100,000 RAM. The loan term is 12 years, the contract is 9.25%, and payments will be made at the end of each month. a. What is the monthly payment on this RAM? b. Fill in the following partial loan amortization table: Month 1 2 3 4 5 Beginning Balance Monthly Payment Interest Ending Balance C. What will be the loan balance at the end of the 12-year term? d. What portion of the loan balance at the end of year 12 represents principal? What portion represents interest?
An investor buys a property for $683,000 with a 25-year mortgage and monthly payments at 7.3% APR. After 18 months the investor resells the property for $747,888. How much cash will the investor have made from the sale, once the mortgage is paid off? O A. $160,262 B. $80,131 C. $112,183 D. $64,105
if a buyer makes a 15% down payment and obtains a $120,000 mortgage what is the sales price of the property?
You purchase a cottage for $175,000. You obtain a 30-year, fixed rate mortgage loan at 12.5% after paying a down payment of 30%. Of the second month's mortgage payment, how much is interest and how much is applied to the principal? (Round your answers to the nearest cent.) Interest: $ _______ Applied to the principle: $________
Use a bankers year: 360 days To complete the sale of a house, the you accept a 240-day note for $9,000 at 7% simple interest. (Both interest and principal are repaid at the end of the 240 days.) Wishing to use the money sooner for the purchase of another house, the you sell the note to a third party for $9,108 after 80 days. What annual simple interest rate will the third party receive for the investment? Express your answer as a percentage.
A property is available for sale that could be financed with a fully amortizing $250,000 loan at 8% with a monthly payment over 30 years. The builder is offering buyers a mortgage that reduces the payment by 20% for first and second year. After the second year, regular payment would be made for the remainder of the loan term. What is the first-year monthly payment for buyer? 1467.53 1657.32 1723.56
Suppose a.home owner has an existing mortgage loan with these terms: remaining balance of Sh. 50,000, interest rate of 8% and remaining term of 10 years (monthly payments). The loan can be replaced by a loan at an interest rate of 6% at a cost of 8% of the outstanding loan amount Should the home owner refinance? What difference would it make if the home owner expecis to be in the home for only five more years?.
A builder is offering $107, 960 loans for his properties at 9 percent for 25 years. Monthly payments are based on current market rates of 9.5 percent and are to be fully amortized over 25 years. The property would normally sell for $120,000 without any special financing. Required: a. At what price should the builder sell the properties to earn, in effect, the market rate of interest on the loan? Assume that the buyer would have the loan for the entire term of 25 years. b. At what price should the builder sell the properties to earn, in effect, the market rate of interest on the loan if the property is resold after 10 years and the loan repaid?
A borrower is purchasing a property for $180,000 and can choose between two possible loan alternatives. The first is a 90% loan for 25 years at 9% interest and the second is a 95% loan for 25 years at 9.25% interest. Assuming the loan will be held to maturity, what is the incremental cost of borrowing the extra money? 18.75% OO 14.34% 13.50% 12.01%
B. Suppose you want to buy a rent to own house worth P450,000. You made a down payment of 15% of the purchase price and take a 25 year mortgage for the balance. a. What is your down payment? b. What is your mortgage amount? c. What is the total interest charged over the life of the loan if your monthly payment is P2,200? Solve manually.
Assume an elderly couple owns a $400,000 home that is free and clear of mortgage debt. A reverse annuity mortgage (RAM) lender has agreed to a $300,000 RAM. The loan term is 15 years, the contract is 5.25%, and payments will be made at the end of each month. What portion of the loan balance at the end of year 15 represents interest (rounded to thousands)? Excel a) $95,000 Ob) $102,000 c) $174,000 d) $198,000 e) $205,000