Pfin (with Mindtap, 1 Term Printed Access Card) (mindtap Course List)
7th Edition
ISBN: 9780357033609
Author: Randall Billingsley, Lawrence J. Gitman, Michael D. Joehnk
Publisher: Cengage Learning
expand_more
expand_more
format_list_bulleted
Concept explainers
Question
Chapter 5, Problem 11FPE
Summary Introduction
To identify: Whether the Person D be supposed to refinance her mortgage under the particular terms or not by using the Worksheet 5.4.
Expert Solution & Answer
Want to see the full answer?
Check out a sample textbook solution
Students have asked these similar questions
Please Answer part a,b,c of this textbook question about the Application of Time Value of Money to Mortgages.
Tiana graduated from college 5 years ago and has been working since then. Shewants to buy her first house costing $325,000 and has obtained a loan from a Bank. A minimumdown payment of 15% would be required and the bank will provide the difference. Her grandparenthave told her that they will cover her down payment.
a. A Bank has quoted her mortgage interest rate is 4.5%; this rate would be compoundedsemi-annually, while her payments would be made monthly. What is the effective monthlyinterest rate (EMR) that she would pay?
b. Calculate her monthly mortgage payment, assuming 15% down payment from hergrandparents and a mortgage maturity of 25 years.
c. Given (b) above, how much of her payment in the 2nd month will go toward repayment ofprincipal and how much is interest payment?
In order to buy a vacation home, Neal and Lilly took out a 20-year mortgage for $220,000 at an
annual interest rate of 6%. After 10 years, they refinanced the unpaid balance of $142,125 at an
annual rate of 4%. Use the table to find the monthly payments on the original loan; the monthly
payments on the new loan; and the total amount saved on interest by refinancing.
Click the icon to view a table of monthly payments on a $1,000 loan.
The monthly payments on the original loan are $
(Type an integer or a decimal.)
Mortgage, part 1 (The Loan)5 years ago you purchased a home for $215,000. You made a 10% down payment and paid for the rest with a 30 year mortgage with a rate of 4.65%.
How much was the down payment?
How much of the purchase price did you finance with the loan?
What is your monthly payment? Use solver. Clearly write the formula you will use as well as all values used in the formula.
How much of the loan is left to pay after the first 5 years? Use solver. Clearly write the formula you will use as well as all values used in the formula.
How much did you pay to the lender (total) over the first 5 years?
How much of what you paid to the lender in the first 5 years was interest?
If you paid this loan for all 30 years, how much interest would you pay?
Chapter 5 Solutions
Pfin (with Mindtap, 1 Term Printed Access Card) (mindtap Course List)
Knowledge Booster
Learn more about
Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, finance and related others by exploring similar questions and additional content below.Similar questions
- Please show how to solve questions a. and b. using an excel spreadsheet, and please show the excel formulas. Carly decides to buy a house with price of $450,000. Carly puts 20% down payment and consider a 30-year fixed rate mortgage to pay the remaining balance. The lender offers Carly two choices of the mortgage with monthly payments in the table provided. Suppose that the origination cost is $6,000. a. If Carly holds the loan for 30 years, what is the effective cost for each choice? b. How about the effective cost for each choice if the loan will only be outstanding for 5 years (60 months) (the borrower will pay off the loan at the end of 60 months)?arrow_forwardO CONSUMER MATHEMATICS Finding the monthly payment, total payment, and interest for a... When Laura bought her house, she got her mortgage through a bank. The mortgage was a personal, amortized loan for $99,500, at an interest rate of 3.75%, with monthly payments for a term of 40 years. For each part, do not round any intermediate computations and round your final answers to the nearest cent. If necessary, refer to the list of financial formulas. (a) Find Laura's monthly payment. (b) If Laura pays the monthly payment each month for the full term, find her total amount to repay the loan. $0 (c) If Laura pays the monthly payment each month for the full term, find the total amount of interest she will pay. $0 X Monthly Payment Formula M= P r 12 r 1- ( 1 + 12 ) - 12tarrow_forwardYou have been shopping for a new home. You have a choice of financing.You can choose either a $200,000 mortgage at 4.75 percent for 30 years, ora $200,000 mortgage at 3.5 percent for 15 years.a. Calculate the monthly payment for both the 30-year and 15-yearmortgages.b. Calculate the amount of interest paid over the life of the loan for bothmortgages.c. Choose the best mortgage for you and explain your answer.arrow_forward
- Isiah a sales manager of a big companyl, wants to buy herself a car that she can use at her job and for personal use. She is considering getting a car loan. Loan amount: P1,500,000.00 5 years 10% 10% Installment term: Annual rate: Annual effective interest rate: Required: Complete the amortization table for the loan Isiah is considering. Months Total Payment Principal Interest Outstanding 1,500,000 1 2 4 5 3.arrow_forward2. They decide to shop for furnishings for the new house. They choose items that amount to $2400.00. The store has 2 fixed installment loan options for purchasing: Option 1: 20% down payment and financing at 7% simple interest per year for 2 years. Option 2: no down payment and financing at 7.75% simple interest for 3 years. Answer each of the following questions separately, showing all your work to reach each answer. A. Which option will result in smaller total finance charge? What will that total finance charge be? B. Which option will result in the smaller monthly payment? What will that monthly payment be? C. They decide to defer any purchases and invest in a savings account a $2400 bonus that Maria will be getting from work. The rate is 1.5% interest compounded every month. How much interest will they earn in 3 years? D. They decide to defer any purchases and loan the $2400 bonus to a needy relative at 3% simple interest per year. How long will the term of the loan need to be if…arrow_forward2.They decide to shop for furnishings for the new house. They choose items that amount to $2400.00. The store has 2 fixed installment loan options for purchasing: Option 1: 20% down payment and financing at 7% simple interest per year for 2 years. Option 2: no down payment and financing at 7.75% simple interest for 3 years. Answer each of the following questions separately, showing all your work to reach each answer. A. Which option will result in smaller total finance charge? What will that total finance charge be? B. Which option will result in the smaller monthly payment? What will that monthly payment be? C. They decide to defer any purchases and invest in a savings account a $2400 bonus that Maria will be getting from work. The rate is 1.5% interest compounded every month. How much interest will they earn in 3 years? D. They decide to defer any purchases and loan the $2400bonus to a needy relative at 3% simple interest per year. How long will the term of the…arrow_forward
- Show all workings and make explanations when necessar You bought your house five years ago and you believe you will be in the house only about five more years before it gets too small for your family. Your original home value when you bought it was $500,000, you paid 10 percent down, and you financed closing costs equal to 3 percent of the mortgage amount. The mortgage was a 25-year fixed-rate mortgage with a 5 percent annual interest rate. Rates on 30-year mortgages are now at 3 percent. Your total refinancing costs will be 3 percent of the new mortgage amount. A new down payment is not required. Should you refinance?arrow_forwardSherry Smart is buying a $350,000 home and will pay the mortgage monthly for 30 years. She has a good credit score and has qualified for a 5.125% loan interest. How much will she be paying monthly for the home? a. $2,013.67 b. $1,572.72 c. $975.88 d. $1,318.69arrow_forwardYou have been asked to determine whether it is beneficial for a homeowner to refinance their current mortgage loan. Their loan for 200,000 was originated three years ago and was a 30 year FRM with an interest rate of 7.5%. Their mortgage payment is currently $1,398.43. This loan now currently has 27 years remaining, and the homeowner is looking to refinance their current balance (i.e. the balance at the end of month 36) into a new 27 year FRM with an interest rate of 5.5%. How much will the homeowner save in interest over the 27 years remaining, assuming no prepayments? Round to the nearest dollar.arrow_forward
- Heather McIntosh recently purchased a home for $175,000. She put $22,500 down and took out a 25-year loan at 6.5 percent interest. Round your answers to the nearest cent. Use Table 9-4 to determine her monthly payment. Round Estimating Mortgage Loan Payments for Principal and Interest in your intermediate calculations to four decimal places. How much of her first payment will go toward interest and principal? Interest will be $ Principal will be $ How much will she owe after that first month? (table 9-2) $ How much will she owe after three months? Do not round intermediate calculations.arrow_forwardRepaying a Loan While Mary Corens was a student at the University of Tennessee, she borrowed $9,000 in student loans at an annual interest rate of 10%. If Mary repays $1,300 per year, then how long (to the nearest year) will it take her to repay the loan? Do not round intermediate calculations. Round your answer to the nearest whole number.arrow_forwardThe Becker family is getting a home loan to finance a $260,000 mortgage. While looking for a mortgage, they found two alternatives: Mortgage A 30-year loan with an interest rate of 3.611% and a monthly payment of $1,184. Mortgage B 15-year loan with an interest rate of 2.7% Recall: Calculate the total amount paid for Mortgage A. Calculate the total interest paid for Mortgage A. Calculate the monthly payment for Mortgage B. Calculate the total amount paid for Mortgage B. Calculate the total interest paid for Mortgage B. Write a two or more sentences giving the Becker family some advice about which mortgage to choose. Why might the Becker family not take your advice from part c)? Answer in one or two sentences.arrow_forward
arrow_back_ios
SEE MORE QUESTIONS
arrow_forward_ios
Recommended textbooks for you
