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1) Raylan Givens borrows $150,000 to purchase house. Adjustable rate mortgage carries a 1.5 percent rate for the first 3 years. After that the rate will alter annually to reflect market conditions. Annual cap is 2% (i.e., largest increase in any year is 2%). Loan term is thirty years and payments are made monthly.

i) Determine Raylan’s initial mortgage payment?

ii) Find out the remaining balance on loan after 3 years?

iii) Compute the greatest mortgage payment Raylan might owe when interest rate resets at beginning of the fourth year?

2) You retire at age sixty and expect to live another twenty seven years. On the day you retire, you have= $464,900 in your retirement savings account. You are traditional and expect to earn 4.5% on your money during your retirement. Find how much can you withdraw from your retirement savings every month if you plan to die on day you spend your last penny?

Basic Finance, Finance

  • Category:- Basic Finance
  • Reference No.:- M915012

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