Question

In: Finance

Given info Student loan Annual 14667 4 year total 58558 Interest 4.45% Home Buying home in...

Given info

Student loan

Annual 14667

4 year total 58558

Interest 4.45%

Home

Buying home in 7 years which is 4 years after graduation

30 year mortgage fixed interest 4.37%

House is 450kwith 15% downpayment

Cost of living

Utilities monthly

Electric 45

Phone 25

Internet/cable 115

Water 50

Natural gas 120

Gas 350

Food 400

Rent 0

Yearly expenses

Technology 1000

Car maintenance 500

Clothes 1000

Vacation 1000

Bar/clubs 1000

Salary

65k plus 5k for inflation 70k

First, let's compute your monthly (don't forget to modify your interest rate, for monthly compounding!!) debt of the student loan. Your payments will start on September 2022 and nish on September 2032. Please compute your monthly payment (using the assumptions or your real data [amount loaned, interest rate and duration]) and the total interest you will pay.

2. Compute the monthly payment of your house and the total interest you will pay on it. You have until 2025 to get the money for the down payment and you will start paying your mortgage on September 2025 and continue until September 2055. Compute the total interest you will pay.

Solutions

Expert Solution

Part (1)

Student loan payment Annual 14667

Monthly payment = 14,667 / 12 =  1,222.25

Interest 4.45%; Interest rate per month = 4.45%/12 =  0.0037

Your payments will start on September 2022 and finish on September 2032.

Nper= 10 years = 12 x 10 = 120 months

Present value of loan, L = - PV (Rate, Period, PMT, FV) = - PV(0.0037, 120, 1222.25, 0) = $118,263.84

Total interest payment = Nper x monthly payment - L = 120 x 1,222,25 - $118,263.84 = $28,406.16

Part 2

Home

Buying home in 7 years which is 4 years after graduation

30 year mortgage fixed interest 4.37%

House is 450k with 15% down payment

Amount of loan = 450,000 x (1 - 15%) = $  382,500

Interest rate per month = 4.37% / 12 = 0.0036

you will start paying your mortgage on September 2025 and continue until September 2055.

Hence, Period = 30 years = 12 x 30 = 360 months

Monthly payment = PMT(Rate, Period, PV, FV) = PMT(0.0036, 360, -382500, 0) = $1,908.64

Hence, total interest payment = Period x PMT - PV = 360 x $1,908.64 - 382,500 = $ 304,609.77


Related Solutions

Sarah is buying a home. Her loan will be $100,000. She will make annual payments for...
Sarah is buying a home. Her loan will be $100,000. She will make annual payments for the next 30 years to retire this loan. The interest rate on the loan is 4 %. A. How much will her annual payments be? B. How much interest will she pay over the life of the loan? C. How much of her first payment will be applied to principal? D. How much will she still owe on the loan after 10 years?
Consider a $12,000 loan with 4 equal annual payments and 10% interest. a. Calculate the annual...
Consider a $12,000 loan with 4 equal annual payments and 10% interest. a. Calculate the annual payment, n = 4, r = 0.10. b. Prepare a complete loan payment schedule table for this loan. You need the time period, the beginning principal, payment, interest paid, principal paid, and ending principal in your table. c. Now assume that the loan is fully amortized over 4 years, however, the interest rate is variable. That is, the bank changes a different rate each...
You are buying a car and will borrow $31,837 with a 5-year loan. The interest rate...
You are buying a car and will borrow $31,837 with a 5-year loan. The interest rate is 4.46%, what is your monthly payment?
A bank lends a CHF 1’000’000 loan at an annual interest rate of 4% to a...
A bank lends a CHF 1’000’000 loan at an annual interest rate of 4% to a customer. The loan foresees a complete linear repayment over its term of 5 years. Debt servicing is made once a year in arrear. Calculate the installment payment and the interest payment at the end of the third year.
What is the total interest for a $1,500 1-year simple interest amortized loan at 6% interest,...
What is the total interest for a $1,500 1-year simple interest amortized loan at 6% interest, with monthly payments
You are buying a Tesla for $70,000 today with a 5-year loan of 5 annual payments...
You are buying a Tesla for $70,000 today with a 5-year loan of 5 annual payments (the first payment being a year from today) with an interest rate 3%. Then, at 5th year, you will sell the car. A five-year old Tesla is currently selling for $50,000. Your power consumption is about 3 kWh/day. Currently, you pay 15 cents per kWh. You expect the car to need maintenance costs once, 3 years from today. The current cost for this maintenance...
Given a loan with the following characteristics: Co = 50,000€ Annual effective interest 6% to be...
Given a loan with the following characteristics: Co = 50,000€ Annual effective interest 6% to be amortized in 6 years, and knowing it is a level-fixed payment-rate loan. Just before making the payment of the second annuity, it is decided to change the amortization method, starting to be amortized through constant principal repayments loan. a) Outstanding debt just after making the payment of the 3th annuity b) Amortization schedule for the last 3 years
Imagine that you will have $55,000 in student loan debt when you graduate. The annual interest...
Imagine that you will have $55,000 in student loan debt when you graduate. The annual interest rate on the loan is 6.5%. The loan is amortized over 10 years, with payments due monthly. If you forgo Starbucks and opt to bring your coffee to work, you can make a payment of $250 in addition to your required minimum payment every third month, beginning with month 3. You want to determine how much interest you will save if you make this...
1. A proposed loan of $1m has total annual interest rate and fees of 6%. The...
1. A proposed loan of $1m has total annual interest rate and fees of 6%. The loan’s duration is 5.7 years. The lender’s cost of funds is 5.25%. Comparable loans have an interest rate of 5.85%. The expected maximum change in the loan rate due to a change in the credit risk premium for the loan is 1.25% (based on actual change in credit risk premium for the worst 1% of comparable loans over some prior period). a. What is...
Junoic Corporation has an existing loan in the amount of $4 million with an annual interest...
Junoic Corporation has an existing loan in the amount of $4 million with an annual interest rate of 6.4%. The company provides an internal company-prepared financial statement to the bank under the loan agreement. Two competing banks have offered to replace Junoic Corporation's existing loan agreement with a new one. Green Back Bank has offered to loan Junoic $4 million at a rate of 4.9% but requires Junoic to provide financial statements that have been reviewed by a CPA firm....
ADVERTISEMENT
ADVERTISEMENT
ADVERTISEMENT