Question

In: Accounting

John Doe has just been offered a home loan towards purchase of house that is being...

John Doe has just been offered a home loan towards purchase of house that is being sold for

$230,000.

He will be required to make a

15%

down payment, as well as mortgage processing fees and closing costs of

$3,000.

The loan has to be paid off in monthly payments over a 30-year period at a fixed interest rate of

6%

per year compounded monthly. He will also be required to pay an additional

$92

per month as mortgage insurance. Using Excel, answer the following questions:

(a) The monthly mortgage payment is

(enter as a positive number to the nearest dollar) (b) The total monthly payment is

(enter as a positive number to the nearest dollar)(c) The nominal APR is

(to the nearest 2 decimal places) The effective APR is

(to the nearest 2 decimal places)(d) Over the 30-year period, the total amount of interest paid on the loan is

(enter as a positive number to the nearest dollar).(e) The interest amount in the month

60

payment is

(enter as a positive number to the nearest dollar) The principal amount in the month

60

payment is

(enter as a positive number to the nearest dollar)(f) The balance on the loan immediately after making the payment at the end of month

60

is

(enter as a positive number to the nearest dollar)

Expert Solution

House being sold at $230,000

Down payment - 15%

Mortgage processing fees and closing costs of $3,000

Fixed interest rate of 6% per year compounded monthly.

Additional $92 per month as mortgage insurance i.e

230000- 15% = $195,500 - $3000 = $192,500 *6% = 11550/12 = 962.5 + 92 (monthly)= 1054.5 = 12654

i.e 12654 *30 = 379,620

House being sold		2,30,000
Loan Amount	192500
Interest	6%
Additional Insurance per month	92

Down Payment	15%
Fees	3000
Monthly	0.005
No of yr	30

Year	Opening Balance	Payment	Interest	Principal	Loan Balance
1	192500.00	1154.13	962.50	191.63	192308.37
2	192308.37	1154.13	961.54	192.59	192115.77
3	192115.77	1154.13	960.58	193.56	191922.22
4	191922.22	1154.13	959.61	194.52	191727.69
5	191727.69	1154.13	958.64	195.50	191532.20
6	191532.20	1154.13	957.66	196.47	191335.72
7	191335.72	1154.13	956.68	197.46	191138.27
8	191138.27	1154.13	955.69	198.44	190939.82
9	190939.82	1154.13	954.70	199.44	190740.39
10	190740.39	1154.13	953.70	200.43	190539.95
11	190539.95	1154.13	952.70	201.43	190338.52
12	190338.52	1154.13	951.69	202.44	190136.08
13	190136.08	1154.13	950.68	203.45	189932.62
14	189932.62	1154.13	949.66	204.47	189728.15
15	189728.15	1154.13	948.64	205.49	189522.66
16	189522.66	1154.13	947.61	206.52	189316.14
17	189316.14	1154.13	946.58	207.55	189108.58
18	189108.58	1154.13	945.54	208.59	188899.99
19	188899.99	1154.13	944.50	209.63	188690.36
20	188690.36	1154.13	943.45	210.68	188479.67
21	188479.67	1154.13	942.40	211.74	188267.94
22	188267.94	1154.13	941.34	212.80	188055.14
23	188055.14	1154.13	940.28	213.86	187841.28
24	187841.28	1154.13	939.21	214.93	187626.35
25	187626.35	1154.13	938.13	216.00	187410.35
26	187410.35	1154.13	937.05	217.08	187193.27
27	187193.27	1154.13	935.97	218.17	186975.10
28	186975.10	1154.13	934.88	219.26	186755.84
29	186755.84	1154.13	933.78	220.36	186535.48
30	186535.48	1154.13	932.68	221.46	186314.03
31	186314.03	1154.13	931.57	222.56	186091.46
32	186091.46	1154.13	930.46	223.68	185867.78
33	185867.78	1154.13	929.34	224.80	185642.99
34	185642.99	1154.13	928.21	225.92	185417.07
35	185417.07	1154.13	927.09	227.05	185190.02
36	185190.02	1154.13	925.95	228.18	184961.83
37	184961.83	1154.13	924.81	229.33	184732.51
38	184732.51	1154.13	923.66	230.47	184502.04
39	184502.04	1154.13	922.51	231.62	184270.41
40	184270.41	1154.13	921.35	232.78	184037.63
41	184037.63	1154.13	920.19	233.95	183803.68
42	183803.68	1154.13	919.02	235.12	183568.57
43	183568.57	1154.13	917.84	236.29	183332.27
44	183332.27	1154.13	916.66	237.47	183094.80
45	183094.80	1154.13	915.47	238.66	182856.14
46	182856.14	1154.13	914.28	239.85	182616.29
47	182616.29	1154.13	913.08	241.05	182375.23
48	182375.23	1154.13	911.88	242.26	182132.97
49	182132.97	1154.13	910.66	243.47	181889.50
50	181889.50	1154.13	909.45	244.69	181644.82
51	181644.82	1154.13	908.22	245.91	181398.91
52	181398.91	1154.13	906.99	247.14	181151.77
53	181151.77	1154.13	905.76	248.38	180903.39
54	180903.39	1154.13	904.52	249.62	180653.77
55	180653.77	1154.13	903.27	250.87	180402.91
56	180402.91	1154.13	902.01	252.12	180150.79
57	180150.79	1154.13	900.75	253.38	179897.41
58	179897.41	1154.13	899.49	254.65	179642.76
59	179642.76	1154.13	898.21	255.92	179386.84
60	179386.84	1154.13	896.93	257.20	179129.64
61	179129.64	1154.13	895.65	258.49	178871.15
62	178871.15	1154.13	894.36	259.78	178611.37
63	178611.37	1154.13	893.06	261.08	178350.29
64	178350.29	1154.13	891.75	262.38	178087.91
65	178087.91	1154.13	890.44	263.70	177824.21
66	177824.21	1154.13	889.12	265.01	177559.20
67	177559.20	1154.13	887.80	266.34	177292.86
68	177292.86	1154.13	886.46	267.67	177025.19
69	177025.19	1154.13	885.13	269.01	176756.18
70	176756.18	1154.13	883.78	270.35	176485.83
71	176485.83	1154.13	882.43	271.71	176214.12
72	176214.12	1154.13	881.07	273.06	175941.06
73	175941.06	1154.13	879.71	274.43	175666.63
74	175666.63	1154.13	878.33	275.80	175390.83
75	175390.83	1154.13	876.95	277.18	175113.65
76	175113.65	1154.13	875.57	278.57	174835.08
77	174835.08	1154.13	874.18	279.96	174555.12
78	174555.12	1154.13	872.78	281.36	174273.76
79	174273.76	1154.13	871.37	282.77	173991.00
80	173991.00	1154.13	869.95	284.18	173706.82
81	173706.82	1154.13	868.53	285.60	173421.22
82	173421.22	1154.13	867.11	287.03	173134.19
83	173134.19	1154.13	865.67	288.46	172845.72
84	172845.72	1154.13	864.23	289.91	172555.82
85	172555.82	1154.13	862.78	291.36	172264.46
86	172264.46	1154.13	861.32	292.81	171971.65
87	171971.65	1154.13	859.86	294.28	171677.37
88	171677.37	1154.13	858.39	295.75	171381.63
89	171381.63	1154.13	856.91	297.23	171084.40
90	171084.40	1154.13	855.42	298.71	170785.69
91	170785.69	1154.13	853.93	300.21	170485.48
92	170485.48	1154.13	852.43	301.71	170183.77
93	170183.77	1154.13	850.92	303.22	169880.56
94	169880.56	1154.13	849.40	304.73	169575.82
95	169575.82	1154.13	847.88	306.26	169269.57
96	169269.57	1154.13	846.35	307.79	168961.78
97	168961.78	1154.13	844.81	309.33	168652.46
98	168652.46	1154.13	843.26	310.87	168341.58
99	168341.58	1154.13	841.71	312.43	168029.16
100	168029.16	1154.13	840.15	313.99	167715.17
101	167715.17	1154.13	838.58	315.56	167399.61
102	167399.61	1154.13	837.00	317.14	167082.47
103	167082.47	1154.13	835.41	318.72	166763.75
104	166763.75	1154.13	833.82	320.32	166443.43
105	166443.43	1154.13	832.22	321.92	166121.52
106	166121.52	1154.13	830.61	323.53	165797.99
107	165797.99	1154.13	828.99	325.14	165472.84
108	165472.84	1154.13	827.36	326.77	165146.07
109	165146.07	1154.13	825.73	328.40	164817.67
110	164817.67	1154.13	824.09	330.05	164487.62
and so on

a. The monthly mortgage payment is $1154.13

b. The total monthly payment is $415488.51

c.The nominal APR is 13%

d.Over the 30-year period, the total amount of interest paid on the loan is $222988.51

e.The interest amount in the month 60 payment is $55877.72

f.The balance on the loan immediately after making the payment at the end of month 60 is $179129.64

ekkarill92 answered 5 months ago

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