The amount that Person X owes on the mortgage after 15 years. Introduction: The amount of money that is made throughout the course of a year is known as the annual payment .

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Chapter 4, Problem 40P

Summary Introduction

To determine: The amount that Person X owes on the mortgage after 15 years.

Introduction:

The amount of money that is made throughout the course of a year is known as the annual payment.

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Suppose you take out a $117,000, 20-year mortgage loan to buy a condo. The interest rate on the loan is 5%. To keep things simple, we will assume you make payments on the loan annually at the end of each year. a. What is your annual payment on the loan? b. Construct a mortgage amortization. c. What fraction of your initial loan payment is interest? d. What fraction of your initial loan payment is amortization? e. What is the total of the loan amount paid off after 10 years (halfway through the life of the loan)? f. If the inflation rate is 3%, what is the real value of the first (year-end) payment? g. If the inflation rate is 3%, what is the real value of the last (year-end) payment? h. Now assume the inflation rate is 6% and the real interest rate on the loan is unchanged. What must be the new nominal interest rate? i-1. Recompute the amortization table. i-2. What is the real value of the first (year-end) payment in this high-inflation scenario? j. What is the real value of the last…

d. How much will John pay in interest over the life of the loan if he makes fixed principal payments for the next 5 years? e. Which option would you recommend for John?

Suppose you take a $268,188 30-year fixed-rate mortgage at 5.86%, 4 discount points, monthly payments. At the end of year 3 you inherit $15,193 from your now-favorite aunt. You decide to apply this $15,193 to the principal balance of your loan. What is your net interest savings over the life of the loan, assuming the loan is held to its maturity?

Answer 2

Question

Chapter 4, Problem 40P

Summary Introduction

To determine: The amount that Person X owes on the mortgage after 15 years.

Introduction:

The amount of money that is made throughout the course of a year is known as the annual payment.

Expert Solution & Answer

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Answer 3

Question

Chapter 4, Problem 40P

Summary Introduction

To determine: The amount that Person X owes on the mortgage after 15 years.

Introduction:

The amount of money that is made throughout the course of a year is known as the annual payment.

Expert Solution & Answer

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Answer 4

Question

Chapter 4, Problem 40P

Summary Introduction

To determine: The amount that Person X owes on the mortgage after 15 years.

Introduction:

The amount of money that is made throughout the course of a year is known as the annual payment.

Expert Solution & Answer

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Answer 5

Chapter 4, Problem 40P

Summary Introduction

To determine: The amount that Person X owes on the mortgage after 15 years.

Introduction:

The amount of money that is made throughout the course of a year is known as the annual payment.

Answer 6

Chapter 4, Problem 40P

Summary Introduction

To determine: The amount that Person X owes on the mortgage after 15 years.

Introduction:

The amount of money that is made throughout the course of a year is known as the annual payment.

Answer 7

Chapter 4, Problem 40P

Summary Introduction

To determine: The amount that Person X owes on the mortgage after 15 years.

Introduction:

The amount of money that is made throughout the course of a year is known as the annual payment.

Answer 8

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Answer 9

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Answer 11

Ch. 4.1 - Prob. 1CC Ch. 4.1 - Prob. 2CC Ch. 4.2 - Prob. 1CC Ch. 4.2 - Prob. 2CC Ch. 4.2 - Prob. 3CC Ch. 4.3 - Prob. 1CC Ch. 4.3 - Prob. 2CC Ch. 4.4 - Prob. 1CC Ch. 4.4 - What benefit does a firm receive when it accepts a...Ch. 4.5 - How do you calculate the present value of a a....

The amount that Person X owes on the mortgage after 15 years. Introduction: The amount of money that is made throughout the course of a year is known as the annual payment .

Solution Summary: The author explains the amount of money that is made throughout the course of a year is known as the annual payment and the remaining loan payment is 426,293.

Concept explainers

To determine: The amount that Person X owes on the mortgage after 15 years.

Introduction:

The amount of money that is made throughout the course of a year is known as the annual payment.

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Chapter 4 Solutions

The amount that Person X owes on the mortgage after 15 years. Introduction: The amount of money that is made throughout the course of a year is known as the annual payment .

Solution Summary: The author explains the amount of money that is made throughout the course of a year is known as the annual payment and the remaining loan payment is 426,293.

Concept explainers

To determine: The amount that Person X owes on the mortgage after 15 years. Introduction: The amount of money that is made throughout the course of a year is known as the annual payment.

Want to see the full answer?

Chapter 4 Solutions

To determine: The amount that Person X owes on the mortgage after 15 years.

Introduction:

The amount of money that is made throughout the course of a year is known as the annual payment.