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In: Finance

(For this part, you MUST present sufficient solution steps, and MUST apply specific Excel functions =PV(…),...

(For this part, you MUST present sufficient solution steps, and MUST apply specific Excel functions =PV(…), =FV(…), =PMT(…), =NPER(…), =RATE(…), =PRICE(…) or =YIELD(…) whenever applicable. Please show me the EXCEL functions that was used to help me better understand was equals what. Using Excel finance formulas

You apply for a 20-year, fixed-rate (APR 6.48%) monthly-payment-required mortgage loan for a house selling for $150,000 today. Your bank requires 22% initial down payment of house value (to be paid in cash immediately), and add $3,000 application-process-closing cost into the beginning loan balance.

(a) What is your monthly loan payment if you stick to the mortgage deal till the end (assuming each payment is made at the end of each month)?

(b) 9 years after buying the house, what will be the remaining loan principal balance? (Please note again that it is a monthly mortgage.)

(c) 9 years after buying the house, the loan market rate drops from 6.48% APR to 6.00% APR. You plan to refinance, but the bank would charge an extra fee of $4,500 for refinancing (which is carried into the current remaining loan balance for amortization). Would you be able, and by how much, to lower your monthly loan payment if you choose to refinance on the remaining loan principal balance over the remaining loan life period? Based on your calculation results, should you choose to refinance or not?

(d) Redo the calculations in Question (c), assuming that the loan market rate drops from 6.48% APR to 5.76% APR (instead of 6.00%). Shall you choose to refinance then?

Solutions

Expert Solution

jeff jeffy answered 1 year ago
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