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(1) Emily Morrison purchased a new house for ​$100,000. She paid ​$40,000 upfront and agreed to...

(1) Emily Morrison purchased a new house for ​$100,000. She paid ​$40,000 upfront and agreed to pay the rest over the next 20 years in 20 equal annual payments that include principal payments plus 9 percent compound interest on the unpaid balance. What will these equal payments​ be? a.  Emily Morrison purchased a new house for ​$100,000 and paid ​$40,000 upfront. How much does she need to borrow to purchase the​ house​(Round to the nearest​ dollar.)

(2) To pay for your​ education, you've taken out ​$23,000 in student loans. If you make monthly payments over 11 years at 8 percent compounded​ monthly, how much are your monthly student loan​ payments? The monthly payment of your student loan is ? ​(Round to the nearest​ cent.)

(3) To buy a new​ house, you must borrow ​$160,000. To do​ this, you take out a ​$160,000​, 35​-year, 8 percent mortgage. Your mortgage​ payments, which are made at the end of each year​ (one payment each​ year), include both principal and 8 percent interest on the declining balance. How large will your annual payments​ be? The amount of your annual payment will be $?. (Round to the nearest​ cent.)

(4) To buy a new​ house, you must borrow ​$160,000. To do​ this, you take out a ​$160,000​, 35​-year, 8 percent mortgage. Your mortgage​ payments, which are made at the end of each year​ (one payment each​ year), include both principal and 8 percent interest on the declining balance. How large will your annual payments​ be? The amount of your annual payment will be ​$? (Round to the nearest​ cent.)

Solutions

Expert Solution

Question 1

Sol:

a)

Home Purchase value = $100,000

Upfront payment made = $40,000

Amount needs to borrow to purchase the​ house​ will be = $100,000 - $40,000 = $60,000

Loan value (PV) = $60,000

Period (NPER) = 20

Interest rate = 9%

To determine equal payments​ to be made we can use PMT function in excel:

Loan value

-60,000

NPER

20

Interest rate

9%

Annual payments

$6,572.79

Therefore annual equal payment to be made will be $6,572.79

Workings

Note = As per Chegg policy I am only allowed to answer one question at a time. Request you to kindly place the other question separately.

jeff jeffy answered 2 years ago
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