Question

In: Finance

Problems 5 - 12 relate to the following information: You are purchasing a house for $95,000....

Problems 5 - 12 relate to the following information: You are purchasing a house for $95,000. The lender requires a 10% down payment, and will finance the rest with a 30 year fixed rate mortgage with monthly payments at 9 7/8% with two discount points charged. PLEASE USE FINACIAL CALCULLATOR AND SHOW THE WORK

5. Interest: How much interest is paid during the third year? [8315.4

6. Interest: How much interest is paid in the first month? [$703.59]

7. Interest: How much interest is paid in the 37th month? [$690.26]

8. Principal: How much principal is paid during the first month? [$38.84]

9. Principal: How much principal is paid during the 37th month? [$52.17]

10. Interest: How much interest is paid in the second year? [$8371.02]

11. Interest: How much interest is paid over the life of the loan if the loan is held to maturity? [$181,777.71]

12. Construct an annualized amortization schedule for the first four years of the loan

Expert Solution

LOAN AMOUNT =$85500, INTEREST 9.875%, TIME 360 MONTHS(30YEARS)

BELOW IS LOAN AMORTIZATION TABLE FOR FIVE YEARS


Tenure (Months)	360
Interest	9.875%
Loan Amount	85500




Month	EMI	Interest	Principle	Loan Outstanding
1	742	704	39	85461
2	742	703	39	85422
3	742	703	39	85383
4	742	703	40	85343
5	742	702	40	85303
6	742	702	40	85262
7	742	702	41	85221
8	742	701	41	85180
9	742	701	41	85139
10	742	701	42	85097
11	742	700	42	85055
12	742	700	43	85012
13	742	700	43	84969
14	742	699	43	84926
15	742	699	44	84883
16	742	699	44	84839
17	742	698	44	84794
18	742	698	45	84750
19	742	697	45	84705
20	742	697	45	84659
21	742	697	46	84614
22	742	696	46	84567
23	742	696	47	84521
24	742	696	47	84474
25	742	695	47	84427
26	742	695	48	84379
27	742	694	48	84331
28	742	694	48	84282
29	742	694	49	84234
30	742	693	49	84184
31	742	693	50	84135
32	742	692	50	84085
33	742	692	50	84034
34	742	692	51	83983
35	742	691	51	83932
36	742	691	52	83880
37	742	690	52	83828
38	742	690	53	83775
39	742	689	53	83722
40	742	689	53	83669
41	742	689	54	83615
42	742	688	54	83561
43	742	688	55	83506
44	742	687	55	83450
45	742	687	56	83395
46	742	686	56	83339
47	742	686	57	83282
48	742	685	57	83225
49	742	685	58	83167
50	742	684	58	83109
51	742	684	59	83051
52	742	683	59	82992
53	742	683	59	82932
54	742	682	60	82872
55	742	682	60	82812
56	742	681	61	82751
57	742	681	61	82689
58	742	680	62	82627
59	742	680	62	82565
60	742	679	63	82502

BASED ON TABLE FOLLOWING IS THE ANSWER

5. INTEREST PAID DURING THIRD YEAR=$8315 i.e. sum of interest from 25th month to 36 month from table.

6. interest paid during first year is appox $704..See from table

7. Interest Paid in 37th month is $ 690 Appox..See from table

8. Principal paid during first month is $ 39 appox, see from table in principal column

9. Principal paid during 37th month is $ 52 appox, see from table in principal column

10. Interest paid in second year is interest from 13th month to 24th month =$8371

11. total interest $181778

12. See Table til 48 months

jeff jeffy answered 1 year ago

You are thinking of purchasing a house. The house costs 300000.You have 43000 in cash...

You are thinking of purchasing a house. The house costs 300000. You have 43000 in cash that you can use as a down payment on the house but you need to borrow the rest of the purchase price. The bank is offering a 30yr mortgage that requires annual payments and has an interest rate of 5 percent per year. What will be the annual payment?

You are thinking of purchasing a house. The house costs $200,000. You have $29,000 in cash...

You are thinking of purchasing a house. The house costs $200,000. You have $29,000 in cash that you can use as a down payment on the house, but you need to borrow the rest of the purchase price. The bank is offering a 30-year mortgage that requires annual payments and has an interest rate of 7% per year. What will be your annual payment if you sign this mortgage?

You are thinking of purchasing a house. The house costs $250,000. You have $36,000 in cash...

You are thinking of purchasing a house. The house costs $250,000. You have $36,000 in cash that you can use as a down payment on the house, but you need to borrow the rest of the purchase price. The bank is offering a 30-year mortgage that requires annual payments and has an interest rate of 8% per year. What will be your annual payment if you sign this mortgage?

Part A You are thinking of purchasing a house. The house costs $350,000. You have $50,000...

Part A You are thinking of purchasing a house. The house costs $350,000. You have $50,000 in cash that you can use as a down payment on the house, but you need to borrow rest of the purchase price. The bank is offering a 20-year mortgage that requires monthly payments and has an annual interest rate of 5% per year. Determine your monthly payments if you sign up for this mortgage. Draw the amortization schedule, monthly, using Excel. Calculate the...

1. Assume you are interested in purchasing a $350,000 house with the following characteristics: - 80%...

1. Assume you are interested in purchasing a $350,000 house with the following characteristics: - 80% Loan to Value Loan @ 4% interest (30yr, fully amortized) - Property taxes = 1.2% of purchase price per year - Homeowners Insurance = $1,000/yr Homeowners Association Dues = $200/mo Payment to Income Ratio = 28% Total Obligations to Income Ratio = 35% Questions: A. How much do you have to earn to afford this house (assuming zero consumer debt) B. Will you still...

After selling your house and purchasing a new house you have $25,000 left you wish to...

After selling your house and purchasing a new house you have $25,000 left you wish to invest. The first option you have is a one year T-Bill with a par value of $25,000 which costs $23,250. Your second option is to invest in a 12 month CD with a 6.5% interest rate. Of these two available options which would allow you to receive a higher rate of return. Make sure to show your calculations.

You are purchasing a house and your bank is giving you a special mortgage that will...

You are purchasing a house and your bank is giving you a special mortgage that will require annual payments for 25 years. The amount borrowed now is $350,000 and the first mortgage payment will be in one year. a. Using C as the payment amount, indicate on a timeline all of the cash flows from your perspective related to this mortgage (outflows should be indicated as a negative number). b. What will your payments be if the interest rate is...

Suppose that you are interested in purchasing a house in a particular area of a city...

Suppose that you are interested in purchasing a house in a particular area of a city and are inter- ested in the average size of the homes in that area. In a random sample of 200 homes, you find a sample mean of 2127.94 square feet and a standard deviation of 387.276 square feet. Further- more, you calculated a 99% confidence interval for the true mean size to be (2056.72, 2199.16). Why is it unnecessary to check for normality in...

Problem 12-5 Various transactions related to trading securities [LO12-1, 12-3] The following selected transactions relate to...

Problem 12-5 Various transactions related to trading securities [LO12-1, 12-3] The following selected transactions relate to investment activities of Ornamental Insulation Corporation during 2018. The company buys debt securities, intending to profit from short-term differences in price and maintaining them in an active trading portfolio. Ornamental’s fiscal year ends on December 31. No investments were held by Ornamental on December 31, 2017. Mar. 31 Acquired 8% Distribution Transformers Corporation bonds costing $590,000 at face value. Sep. 1 Acquired $1,470,000 of...

You and your spouse are considering purchasing your first new house. The house price is $300,000....

You and your spouse are considering purchasing your first new house. The house price is $300,000. You will make 10% down payment. The remaining balance can be financed with a 30 year mortgage loan with an annual interest of 6%. A. What is the monthly mortgage payments? B. How much do you need if you are to pay off the loan after 5 years (right after the 60th payment)? C. How much interest (in $) will you save from paying...