9) Mortgage Payment You take out a 20-year fixed mortgage. The annual interest rate is ? = 0.10 and the monthly payment is $4,000. a. What is the total amount of this Mortgage? E.g., What is the PV of this mortgage payment stream? b. If you make an additional payment of $4,000 in period t=1 and period t=2, how long will it take to repay the mortgage?

9) Mortgage Payment You take out a 20-year fixed mortgage. The annual interest rate is ? = 0.10 and the monthly payment is $4,000. a. What is the total amount of this Mortgage? E.g., What is the PV of this mortgage payment stream? b. If you make an additional payment of $4,000 in period t=1 and period t=2, how long will it take to repay the mortgage?

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:Randall Billingsley, Lawrence J. Gitman, Michael D. Joehnk

Chapter5: Making Automobile And Housing Decisions

Section: Chapter Questions

Problem 10FPE

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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…
3. A) What would be the monthly payment on a 15 year mortgage of $200,000 with an APR of 12.3% compounded monthly? 12 B) If you could only afford to pay half of that amount, how long would it take to pay off the mortgage?
a. What will be the monthly payment on a 30-year, $250,000 mortgage loan, where the interest rate is 6% per year, compounded monthly? How much interest is paid over the life of the loan? b. What will be the monthly payment on a 30-year, $250,000 mortgage loan, where the interest rate is 6% per year, compounded continuously? How much interest is paid over the life of the loan? c. What will be the monthly payment on a 15-year, $250,000 mortgage loan, where the interest rate is 6% per year, compounded monthly? How much interest is paid over the life of the loan?
3. Suppose you decide to purchase a $150000 home for $20000 down. A down payment is subtracted from your home’s value and therefore you owe $130000. Well to pay for this amount you will need a loan, so $130000 is the principal on your loan. Suppose the interest rate on a 30 year mortgage is 4.5%. What will your monthly payment be? Create an amortization table for this loan. How much will you pay on the loan if you pay off the loan as
2. If the interest rate on a 30-year mortgage is fixed at 4% and if a monthly payment of $900 is the maximum that the buyer can afford, what is the maximum mortgage load that can be made under these conditions? Write out a difference equation modeling the scenario and show all work to receive full credit.
Assume the monthly payment of a loan amount of $400,000 is $1450. How long will it take to retire the loan if the annual interest rate is 4% ? Use the equation, Monthly payment= Where : P = principal (the amount of your mortgage r = the annual interest rate y = length of the mortgage P∗r12 1−(1+r12 )−12 y
1. You have just obtained a commercial mortgage for $6.25M with a 5-year term, 25-year amortization period and 6.50% mortgage interest rate. (a) Construct an amortization table for the term of the loan assuming annual payments. What is the annual payment? What is the balance at maturity? (b) What is the e¤ective cost of borrowing if the borrower pays an origination fee of $30,000? (c) The borrower can repay the balance of the loan at any time prior to its maturity, but must pay a penalty of 5% of the outstanding balance. What is the cost of borrowing if the borrower pays an origination fee of $30,000 and pays off the remaining balance of the loan after making payments for 4 years?
Suppose you purchase a home and obtain a 15-year fixed-rate loan of $195,000 at an annual interest rate of 6.0%. a) What is your monthly payment? N: months I %: P.V: $ PMT: $ F.V: 0 P/Y: 12 C/Y: 12 b) Of the first month's mortgage payment, how much is interest? HINT: I=Prt Interest: I=$ c) Of the first month's mortgage payment, how much is applied to the principal? HINT: PMT - Interest Amount Applied to Principal: $ d) How much is your outstanding balance after the first month’s payment? HINT: Principal - Amount Applied to Principal Outstanding Balance after first payment: $
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.
(a) Find the monthly mortgage payment on a $170000 15-year mortgage if the interest rate on the loan is 3.81%. (b) How much will you pay in interest over the life of the loan if you pay the minimum monthly payment each month?
TOTAL INTEREST PAID. You are considering purchasing a home that requires $450,000 mortgage at 5.25%. Using a simple interest Loan amortization schedule:A) What is the total amount that you would pay for the 30 year mortgage, including interest?B) What is the total amount that you would pay for the 15 year mortgage, including interest?C) What is the difference in the total interest paid between the two different maturities?
Consider a mortgage loan where the periodic payment is 1 and the per period mortgage interest is 5%. For simplicity, the maturity of the loan is infinite. That is, the borrower has to pay the loan perpetually. The per period market interest rate is 10%. Calculate the market value of the loan. (Note: When an investor buys the loan, she can receive the value of one starting from the next period.)