Question

In: Finance

You will be paying off a mortgage of $250,000 over the next 25 years. You have...

You will be paying off a mortgage of $250,000 over the next 25 years. You have signed a loan agreement with Me-Bank to secure a fixed rate of 5.00%. The mortgage loan is compounded annually.

a)         What are the monthly payments? [4 points]

b)         How much will your payments be over the first five years? [2 points]

c)         What is the amount of principal that you pay off with the first payment? [2 points]

d)         How much principal remains to be paid after the first five years? [2 points]

e)         How much will remain to be paid off after you have made your payment at the end of the 15th year? [2 points]

.

Solutions

Expert Solution

1- Monthly payment amount of mortgage loan/PVAF at .4166% for 300 months 250000/171.0737 1461.358
PVAF at .4166% for 300 months 1-(1+r)^-n /r 1-(1.004166)^-300 /.4166% .712693/.4166% 171.0737
2- How much will your payments be over the first five years amount of monthly payment*no. of months in 5 years 1461.358*60 87681.48
3- Monthly payment in first payment 1461.358
amount of interest payment in first monthly payment 250000*.4166% 1041.5
Amount of prinicpal paid 1461.358-1041.5 419.86
4- Balance in loan account after 5 years principal*(1+r)^n - monthly payment*FVAF at .4166% for 60 months 250000*1.004166^60 -(1461.358*68.0048) 221447.5
FVAf at .4166% for 60 months (1+r)^n-1 /r 1.004166^-60 -1 /.4166% .283308/.4166% 68.0048
5- Balance in loan account after 15 years principal*(1+r)^n - monthly payment*FVAF at .4166% for 180 months 250000*1.004166^180 -(1461.358*267.271) 137784.2
FVAf at .4166% for 60 months 1+r^n -1 /r 1.004166^180 -1 /.4166% 1.113451/.4166% 267.271

jeff jeffy answered 2 years ago
Next > < Previous

Related Solutions

You will be paying off a mortgage of $250,000 over the next 25 years. You have...
You will be paying off a mortgage of $250,000 over the next 25 years. You have signed a loan agreement with Me-Bank to secure a fixed rate of 5.00%. The mortgage loan is compounded semi-annually. a) What are the monthly payments? b) How much will your payments be over the first five years? c) What is the amount of principal that you pay off with the first payment? d) How much principal remains to be paid after the first five...
A $150,000 mortgage at an APR of 5.5% amortized over 25 years can be paid off...
A $150,000 mortgage at an APR of 5.5% amortized over 25 years can be paid off by making monthly payments of $915.59. If instead you make payments of $457.80 every 2 weeks, how much sooner would you be able to repay your mortgage?
You have just negotiated a 5 year mortgage on $100,000 amortized over 25 years at a...
You have just negotiated a 5 year mortgage on $100,000 amortized over 25 years at a rate of 5%. After 5 years of payments, assume that the mortgage rate remains the same, but you change your monthly payment to $1500. If you change your payment, how many more periods will it take you to pay off the remaining loan balance?
You have just negotiated a 5-year mortgage on $400,000 amortized over 25 years at a rate...
You have just negotiated a 5-year mortgage on $400,000 amortized over 25 years at a rate of 3.5%. After 5 years assume that the mortgage rate remains the same, but you increase the payments by 500 dollars per month, in how many periods (months) will you be able to pay the whole amount. please show all steps for answer.
You have just negotiated a 5-year mortgage on $400,000 amortized over 25 years at a rate...
You have just negotiated a 5-year mortgage on $400,000 amortized over 25 years at a rate of 3.5%. After 5 years assume that the mortgage rate remains the same, but you increase the payments by 500 dollars per month, in how many periods (months) will you be able to pay the whole amount. (Hint: Canadian banks quote mortgage rates as a rate per year compounded semi-annually)
You are planning to save for retirement over the next 25 years. To do this, you...
You are planning to save for retirement over the next 25 years. To do this, you will invest $700 per month in a stock account and $300 per month in a bond account. The return of the stock account is expected to be an APR of 9 percent, and the bond account will earn an APR of 5 percent. When you retire, you will combine your money into an account with an APR of 6 percent. All interest rates are...
You are planning to save for retirement over the next 25 years. To do this, you...
You are planning to save for retirement over the next 25 years. To do this, you will invest $900 a month in a stock account and $600 a month in a bond account. The return of the stock account is expected to be 9 percent, and the bond account will pay 6 percent. When you retire, you will combine your money into an account with a 8 percent return.    How much can you withdraw each month from your account...
You are planning to save for retirement over the next 25 years. To do this, you...
You are planning to save for retirement over the next 25 years. To do this, you will invest $1,000 a month in a stock account and $700 a month in a bond account. The return of the stock account is expected to be 11 percent APR compounded monthly, and the bond account will pay 7 percent APR compounded monthly. When you retire, you will combine your money into an account with a return of 9 percent. How much can you...
You have just negotiated a 3-year mortgage on 500,000 amortized over 25 years at rate fo...
You have just negotiated a 3-year mortgage on 500,000 amortized over 25 years at rate fo 6%. Assuming after three years the mortgage rate changes to 5%, what will your new monthly payments? (Hint: Canadian banks quote mortgage rates as a rate per year compounded semi-annually.)
1. You are planning to save for retirement over the next 25 years. To do this,...
1. You are planning to save for retirement over the next 25 years. To do this, you will invest $1,400 a month in a stock account and $1,100 a month in a bond account. The return of the stock account is expected to be 10 percent, and the bond account will pay 6 percent. When you retire, you will combine your money into an account with a return of 9 percent. How much can you withdraw each month from your...
ADVERTISEMENT
Subjects
ADVERTISEMENT
Latest Questions
ADVERTISEMENT