A professional couple wishes to purchase a new home costing $750,000, make a 20 percent downpayment, and finance the remaining $600,000. The rate quoted for a conventional 30-year loan is 6.5084percent interest with 1.875 points and no other closing costs. If, immediately after the one hundredtwentieth payment (10 years), the professional couple decides to sell the house, what will be the unpaidbalance on the loan with the points added to it?

Let's examine the computation in greater detail: 1. Original Loan Amount: Representing 80% of the…

Answered: A professional couple wishes to…

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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Similar questions

suppose that you invest $100 today in a risk-free investment and let the 4 percent annual intrest rate compound. Rounded to the full dollars, what will be the value of your investment 4 years from now?
An individual needs P 12,000 immediately as a down payment on a new appliance. Suppose that he can borrow this money from his insurance company. He must repay the loan in equal payments every six months over a period of 8 years. The nominal rate being charged is 7% compounded continuously. What is the amount of each payment? Select one: a. P 997 b. P 846 c. P 872 d. P 942*please do not use excel
Suppose you purchased a corporate bond with a 10-year maturity, a $1,000 par value, a 9% coupon rate ($45 interest payment every six months), and semiannual interest payments. Five years after the bonds were purchased, the going rate of interest on new bonds fell to 6% (or 6% compounded semiannually). What is the current market value (P) of the bond (five years after the purchase)?(a) P = $890(b) p = $1,223(c) P = $1,090(d) p = $1,128
A couple borrows $4,000 from a lending company for 6 years at 12% At the end of 6 years, it renews the loan for the amount plus $ 4,000 more for three years at 12%. What is the lump sum due a. 16,712.03 b. 15,382.60 c. 14,842.40 d. 12,316.40
The gaming commission is introducing a new lottery game called Infinite Progresso. The winner of the Infinite Progresso jackpot will receive $600 at the end of January, $1,600 at the end of February, $2,600 at the end of March, and so on up to $11,600 at the end of December. At the beginning of the next year, the sequence repeats starting at $600 in January and ending at $11,600 in December. This annual sequence of payments repeats indefinitely. If the gaming commission expects to sell a minimum of 1,150,000 tickets, what is the minimum price they can charge for the tickets to break even, assuming the commission earns 3.00% /per/year/month on its investments and there is exactly one winning ticket?
Which of the following investment options willmaximize your future wealth at the end of 18 years?Assume any funds that remain invested will earn anominal rate of 12% compounded monthly.(a) Deposit $8,000 now.(b) Deposit $120 at the end of each month for thefirst 12 years.(c) Deposit $105 at the end of each month for 18years.(d) Deposit a lump sum in the amount of $35,000 atthe end of year 12.
A 1,000-square-foot office space is leased at $15.00 per square foot during the first year with $2.00 step-up provisions each of the following years. The lease is gross with an expense stop set at $6.65 per square foot, and yearly expenses per square foot are as follows: $6.00, $6.65, and $7.05. The lease provides for two months of free rent at the end of the lease term. If the lease term is three years and the discount rate is 10 percent, what is the effective rent per square foot?
Consider a bond with a face value of $2,000 that pays a coupon of $150 for 10 years. Suppose the bond is purchased at $500, and can be resold next year for $400. What is the rate of return of the bond? 10% 0% -10% 20%
Jane and John have found a house, which owing to a depressed real estate market costs only $201,500. They will put $22,000 down and finance the remainder with a 30-year mortgage loan of 4.65% compounded monthly. They will also have the following expenses: property taxes of $2,100, homeowner's insurance of $1,625, and $290 mortgage insurance (in case one of them dies before the loan is repaid, a requirement from the bank). These annual amounts are paid in 12 installments and are added to the loan payment. i.) What will their full monthly cost be? ii.) If they can afford $1200 a month, can they afford the house?
Armor Investment Company is considering the acquisition of a heavily depreciated building on 10 acres of land. It expects to rent the building as a storage facility and expects to collect cash flows equal to $100,000 next year. However, because depreciation is expected to increase, Armor expects cash flows to decline at a rate of 4 percent per year indefinitely. Armor expects to earn an IRR on investment return (r) at 13 percent. a. What is the value of this property? b. Assume that after 5 years the building could be demolished and the land could be redeveloped with a strip retail improvement. The latter would produce NOI of $200,000 per year, grow at 3 percent per year, and cost $1 million to build. Investors currently earn a 10 percent IRR on such investments. How would this affect your estimate of value in (a)?
A 2-year maturity bond with face value of $1,000 makes annual coupon payments of $80 and is selling at face value. What will be the rate of return on the bond if its yield to maturity at the end of the year is: Note: Do not round intermediate calculations. Enter your answers as a percent rounded to 2 decimal places. 1. 6% - 2. 8% - 3. 10% -
10. Find the amount due at the end of 15 months whose present value is P2,000 at 5% simple discount. ANSWER: 2,133,33

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