Question

In: Finance

You financed the purchase of a $300,000 apartment with a down payment in cash of 20%...

You financed the purchase of a $300,000 apartment with a down payment in cash of 20% of the purchase price. The remaining 80% is financed with a mortgage with a 1% monthly interest rate over the next 20 years. The mortgage is repaid with equal monthly installments.

  1. Compute the monthly installments on the mortgage. (5 points)

  1. What is the outstanding principal balance of the mortgage after 5 years (i.e., after 60 installments)? (5 points)

  1. Ten years later (after 120 installments), your bank manager offers to refinance your mortgage with a new loan carrying a 0.9% interest rate for a one- time commission. What is the maximal commission you would be willing to pay? Assume you pay the commission when you refinance. (Hint: Use Excel Solver. Find the EAR of the old and new mortgage.) (10 points)

Solutions

Expert Solution

Formulae


Related Solutions

Suppose an apartment you want to purchase costs $500,000. You can put down 20% in cash...
Suppose an apartment you want to purchase costs $500,000. You can put down 20% in cash and take out a 30-year fixed rate mortgage loan for the remaining. You believe that you can get an APR of 6.5% on such a mortgage loan at a local bank. Suppose the loan calls for equal monthly payments. Set up a monthly amortization schedule table for the loan (Input: 20%, creating and copying formulas and Excel finance functions: 30%). What is the sum...
Suppose an apartment you want to purchase costs $500,000. You can put down 20% in cash...
Suppose an apartment you want to purchase costs $500,000. You can put down 20% in cash and take out a 30-year fixed rate mortgage loan for the remaining. You believe that you can get an APR of 6.5% on such a mortgage loan at a local bank. Suppose the loan calls for equal monthly payments. 1. Set up a monthly amortization schedule table for the loan (Input: 20%, creating and copying formulas and Excel finance functions: 30%). Use 360 months...
You put 20% down on a home with a purchase price of $250,000. The down payment...
You put 20% down on a home with a purchase price of $250,000. The down payment is thus $50,000, leaving a balance owed of $200,000. A bank will loan you this remaining balance at 3.91% APR. You will make monthly end-of-the-period payments with a 30-year payment schedule. What is the monthly annuity payment under this schedule?
Suppose you have just purchased your first home for $300,000. At the time of purchase you could afford to commit 20% of the purchase price to a down-payment
Suppose you have just purchased your first home for $300,000. At the time of purchase you could afford to commit 20% of the purchase price to a down-payment. Suppose over time you paid down the principal of the loan to $220,000 and at that point in time you can no longer make any mortgage payments (i.e., you default on the loan). If the lender were to foreclose on your property and sell it for $190,000, determine the amount of the...
You purchase a $1,250,000 home by providing a down payment equal to 20% of the purchase price.
You purchase a $1,250,000 home by providing a down payment equal to 20% of the purchase price. You take out a loan for the remaining balance that requires equal end-of -month payments over the next 30 years with an EAR of 3.8%. How interest will be paid with the first two payments?
I. Suppose an apartment you want to purchase costs $500,000. You can put down 20% in...
I. Suppose an apartment you want to purchase costs $500,000. You can put down 20% in cash and take out a 30-year fixed rate mortgage loan for the remaining. You believe that you can get an APR of 6.5% on such a mortgage loan at a local bank. a. Suppose the loan calls for equal monthly payments. Please set up a monthly amortization schedule table for the loan (Input setting: 20%, creating and copying formulas and Excel finance functions: 40%)....
The purchase price of a property, land and improvement, was $1,625,000. you put 20% down payment...
The purchase price of a property, land and improvement, was $1,625,000. you put 20% down payment and the rest was financed. the mortgage is a 30 year loan at 6.5% principal-interest payment. taxes and insurance at the time of purchase are $18,000 each year. the vacancy rate is 8%, while the repair expenses averaged is $8,500 every year. you spend annually about $2,000 for miscellaneous and advertising costs. you manage the property yourself. determine the monthly cash flow from 30...
I have bought a house for $300,000. I made a 20% down payment and borrowed the...
I have bought a house for $300,000. I made a 20% down payment and borrowed the rest at 4.2% APR with monthly compounding. It is a 30-year amortized loan. Prepare the first two rows of the amortization table (beginning balance, PMT, interest paid, principal paid, ending balance).
I have bought a house for $300,000. I made a 20% down payment and borrowed the...
I have bought a house for $300,000. I made a 20% down payment and borrowed the rest at 4.2% APR with monthly compounding. It is a 30-year amortized loan. What will be my payments each month at t=1,2,…,360?
YOUR first condo cost you $160,000, and you pay 20% cash as a down payment, for...
YOUR first condo cost you $160,000, and you pay 20% cash as a down payment, for the remainder you arrange a 30-year mortgage at a 6.5% nominal interest rate, with the first payment due in one month. a ) What will your annual payments be? b) How much of this payment will be interest and how much principal the first year? c) How much would you still owe after the third payment?
ADVERTISEMENT
ADVERTISEMENT
ADVERTISEMENT