Ask Question, Ask an Expert

+61-413 786 465

info@mywordsolution.com

Ask Basic Finance Expert

Finance


Home >> Basic Finance

1. For the following loan, make a table showing the amount of each monthly payment that goes toward principal and interest for the first three months of the loan.

A home mortgage of $164,000 with a fixed APR of 3% for 30 years.(Round the final answers to the nearest cent as needed. Round all intermediate values to six decimal places as needed.)

Month 1:
Interest: ____
Payment towards principal: ____
New Principal: ____

Month 2:
Interest: ____
Payment towards principal: ____
New Principal: ____

Month 3:
Interest: ____
Payment towards principal: ____
New Principal: ____

2. You can afford monthly payments of $800. If current mortgage rates are 3.93% for a 30-year fixed rate loan, how much can you afford to borrow?

How much can you afford to borrow? $______ (round to nearest dollar)

If you are required to make a 10% down payment and you have the cash on hand to do it, how expensive a home can you afford? (Hint: You will need to solve the loan payment formula for P.)

How expensive a home can you afford? $______ (round to nearest dollar)

3. You have a choice between a 30-year fixed rate loan at 6.5% and an adjustable rate mortgage (ARM) with a first year rate of2%. Neglecting compounding and changes in principal, estimate your monthly savings with the ARM during the first year on a $225,000 loan.

What is the approximate monthly savings with the ARM during the first year? $____ (round to nearest dollar)

Suppose that the ARM rate rises to 11.5% at the start of the third year. Approximately how much extra will you then be paying over what you would have paid if you had taken the fixed rate loan?

How much extra $_____ (round to nearest dollar)

4. Compare the monthly payments and total loan costs for the following pairs of loan options. Assume that both loans are fixed rate and have the same closing costs.You need a $30,000 loan.

Option 1: a 30-year loan at an APR of7.65%.
Option 2: a 15-year loan at an APR of 7.25%.

Find the monthly payment for each option.

The monthly payment for option 1 is $ _______
The monthly payment for option 2 is $ _______

Total loan costs for option 1 $ ______
Total loan costs for option 2 $ ______

(Do not round until the final answer. Then round to the nearest cent as needed.)

Basic Finance, Finance

  • Category:- Basic Finance
  • Reference No.:- M91698805
  • Price:- $10

Priced at Now at $10, Verified Solution

Have any Question?


Related Questions in Basic Finance

You just won a national sweepstakes for your prize you

You just won a national sweepstakes! For your prize, you opted to receive never-ending payments. The first payment just paid was $12,077.29. Every year thereafter, the payments will increase by 3.5 percent annually. How ...

Bob katz would like to save 300000 over the next 20 years

Bob Katz would like to save $300,000 over the next 20 years. If Bob knows today that he will be given $100,000 in 15 years as part of an inheritance, how much would Bob still need to save annually over the next 20 years ...

Based on land minerals and natural resources labor and

Based on land, minerals and natural resources, labor and entrepreneurial innovation, which country do you feel has the greatest long-term potential China or Russia.

Company has been growing at a rate of 10 per year and you

Company has been growing at a rate of 10% per year, and you expect this growth rate in earnings and dividends to continue for another 3 years. If the discount rate is 25% and the steady growth rate after 3 years is 2%, w ...

Your goal is to save 1000000 at retirement in 5 years you

Your goal is to save $1,000,000 at retirement in 5 years. You expect you can earn 12.50% over the next 5 years. How much money do you have to save on an annual basis to reach your goal?

Would you pay 23 for a share of common stock that just paid

Would you pay $23 for a share of common stock that just paid a $1.65 dividend, its expected growth rate is 4% and your required return is 11%?

Suppose that tucker industries has annual sales of 580

Suppose that Tucker Industries has annual sales of $5.80 million, cost of goods sold of $2.86 million, average inventories of $1,165,000, and average accounts receivable of $580,000. Assuming that all of Tucker's sales a ...

Friendlys shoe store has earnings before interest and taxes

Friendly's Shoe Store has earnings before interest and taxes of $20290 and net income of $10000. The tax rate is 34 percent. What is the times interest earned ratio? Round your answer to the nearest hundredth.

1 an analyst has modeled xyz stock using the fama amp

1.) An analyst has modeled XYZ stock using the Fama & French three factor model (FF3FM). Over the past few years the risk premium on SMB was 2.75% and the risk premium on HML was 3.50%. Regression analysis shows that XYZ ...

1 i dont understand what major benefits do corporations and

1. I don't understand what major benefits do corporations and investors enjoy because of the existence of organized security exchanges?  2. What is a dividend?  3. Within a corporation, who decides whether to pay dividen ...

  • 4,153,160 Questions Asked
  • 13,132 Experts
  • 2,558,936 Questions Answered

Ask Experts for help!!

Looking for Assignment Help?

Start excelling in your Courses, Get help with Assignment

Write us your full requirement for evaluation and you will receive response within 20 minutes turnaround time.

Ask Now Help with Problems, Get a Best Answer

Why might a bank avoid the use of interest rate swaps even

Why might a bank avoid the use of interest rate swaps, even when the institution is exposed to significant interest rate

Describe the difference between zero coupon bonds and

Describe the difference between zero coupon bonds and coupon bonds. Under what conditions will a coupon bond sell at a p

Compute the present value of an annuity of 880 per year

Compute the present value of an annuity of $ 880 per year for 16 years, given a discount rate of 6 percent per annum. As

Compute the present value of an 1150 payment made in ten

Compute the present value of an $1,150 payment made in ten years when the discount rate is 12 percent. (Do not round int

Compute the present value of an annuity of 699 per year

Compute the present value of an annuity of $ 699 per year for 19 years, given a discount rate of 6 percent per annum. As

Follow Us

© Copyright 2013-14 mywordsolution.com All rights reserved