Question

In: Finance

Tara bought a condo. She paid 22% down and is going to make payments for 20...

  1. Tara bought a condo. She paid 22% down and is going to make payments for 20 years. She locked in the rate for five years. Which of the following statements is not true?
    1.      The interest rate cannot change for five years.
    2.     The way she has set this up, she will pay off the entire loan in 20 years.
    3.      The amortization period is five years.
    4.     The term is five years.

Solutions

Expert Solution

Option d is correct option. The term is five years is not true because the term of the loan is 20 years and not 5 years.

Option a, b and c are incorrect option as the statements are true.


Related Solutions

6) The Gomez Company Inc bought a machine for $175,000. They paid 20% down and amortized...
6) The Gomez Company Inc bought a machine for $175,000. They paid 20% down and amortized the rest at 11.2% over a 3-year period. a) Find their Quarterly payment. b) Using MS-Excel, prepare an amortization table to show how the payments are made and how interest and principal balance are determined c) How much will the company owe after 18 months? What is the amount of interest during their 5th payment?
On September 1, 2018, Susan Chao bought a motorcycle for $32,000. She paid $1,200 down and...
On September 1, 2018, Susan Chao bought a motorcycle for $32,000. She paid $1,200 down and financed the balance with a five-year loan at an annual percentage rate of 7.4 percent compounded monthly. She started the monthly payments exactly one month after the purchase (i.e., October 1, 2018). Two years later, at the end of October 2020, Susan got a new job and decided to pay off the loan.    If the bank charges her a 1 percent prepayment penalty...
On September 1, 2013, Susan Chao bought a motorcycle for $27,000. She paid $1,100 down and...
On September 1, 2013, Susan Chao bought a motorcycle for $27,000. She paid $1,100 down and financed the balance with a five-year loan at an APR of 6.9 percent, compounded monthly. She started the monthly payments exactly one month after the purchase (i.e., October 1, 2013). Two years later, at the end of October 2015, Susan got a new job and decided to pay off the loan.    If the bank charges her a 2 percent prepayment penalty based on...
On September 1, 2013, Susan Chao bought a motorcycle for $21,000. She paid $1,100 down and...
On September 1, 2013, Susan Chao bought a motorcycle for $21,000. She paid $1,100 down and financed the balance with a five-year loan at an APR of 6.3 percent, compounded monthly. She started the monthly payments exactly one month after the purchase (i.e., October 1, 2013). Two years later, at the end of October 2015, Susan got a new job and decided to pay off the loan. If the bank charges her a 2 percent prepayment penalty based on the...
Shirley Trembley bought a house for $187,600. She put 20% down and obtained a mortgage loan...
Shirley Trembley bought a house for $187,600. She put 20% down and obtained a mortgage loan for the balance at 6 3/8% for 30 years. a. Find the monthly payment. b. Find the total interest paid Please show your work
In August 2004, Bonnie Martin bought a house for $391,000. She put 20% down and financed...
In August 2004, Bonnie Martin bought a house for $391,000. She put 20% down and financed the rest with a thirty-year loan at the then-current rate of 5 3 4 %. In 2007, the real estate market crashed. In June 2009, she had to sell her house. The best she could get was $235,000. Was this enough to pay off the loan?I got no. If so, how much did she profit? If not, how much did she have to pay...
 ​(Loan amortization)  On December​ 31, Beth Klemkosky bought a yacht for ​$100,000. She paid ​$20,000 down...
 ​(Loan amortization)  On December​ 31, Beth Klemkosky bought a yacht for ​$100,000. She paid ​$20,000 down and agreed to pay the balance in 14 equal annual installments that include both the principal and 15 percent interest on the declining balance. How big will the annual payments​ be? On December​ 31, Beth Klemkosky bought a yacht for ​$100,000 and paid ​$20,000 ​down, how much does she need to borrow to purchase the​ yacht?
Tara and Arnold have found their dream house. They will make monthly payments of $1,000 each...
Tara and Arnold have found their dream house. They will make monthly payments of $1,000 each (that is, Tara will pay $1,000 and Arnold will pay $1,000 for a total payment of $2,000 per month) for 30 years and the bank has quoted them a rate of 5%. Approximately how much are Tara and Arnold borrowing? Rosemary just received a call from a lawyer, who informed her that a distant cousin of hers left her 400 shares of preferred stock....
Suppose you are buying your first condo for $160,000, and you will make a $15,000 down...
Suppose you are buying your first condo for $160,000, and you will make a $15,000 down payment. You have arranged to finance the remainder with a 30-year, monthly payment, amortized mortgage at a 4.5% nominal interest rate, with the first payment due in one month. What will your monthly payments be?
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