Question

In: Finance

Market Price of home = $450,000 Down Pmt = $50,000 Mortgage Amount to borrow = $400,000...

Market Price of home = $450,000

Down Pmt = $50,000

Mortgage Amount to borrow = $400,000

6% interest rate 30 yr conventional mortgage.

1. What is the monthly mortgage payment?

2. Which dimension of Time Value of Money [out of 7 dimensions] do you apply to solve the [1] question?

3. What should be the ending balance? [4] What is the total interest pmt during the 30 year period?

Expert Solution

1. Monthly payment = $2398.20

2. Which dimension of Time Value of Money [out of 7 dimensions] do you apply to solve the [1] question?

we use Present value Annuity factor to calculate Monthly payment

3. What should be the ending balance?

Ending balance after the end of term of loan will be equal to $0

[4] What is the total interest pmt during the 30 year period?

Interest paid during loan term = Monthly payment * 30 years * 12 months - Loan amount

Interest paid during loan term = 2398.20 * 30 years * 12 months - 400000

Interest paid during loan term = 463352.76

*Please comment if you face any difficulty and please don't forget to thumbs up

jeff jeffy answered 1 year ago

Purchased a building by paying $50,000 cash and issuing a $450,000 mortgage note payable

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