If a current mortgage payment of $4500 per month can be reduced to $3100 per month by refinancing, how many months would you need to remain in the house to recoup refinancing charges of $18,500? (Round up to the nearest month.)

If a current mortgage payment of $4500 per month can be reduced to $3100 per month by refinancing, how many months would you need to remain in the house to recoup refinancing charges of $18,500? (Round up to the nearest month.)

Pfin (with Mindtap, 1 Term Printed Access Card) (mindtap Course List)

7th Edition

ISBN:9780357033609

Author:Randall Billingsley, Lawrence J. Gitman, Michael D. Joehnk

Publisher:Randall Billingsley, Lawrence J. Gitman, Michael D. Joehnk

Chapter5: Making Automobile And Housing Decisions

Section: Chapter Questions

Problem 10FPE

See similar textbooks

Related questions

Q: The Jones Company has just completed the third year of a five-year MACF recovery period for a piece…

A: MACRS is modified accelerated depreciation system in which there is more depreciation during the…

Q: Differentiate between a stated rate of interest and an effective rate of interest. 7. What is the…

A: Given The amount borrowed is $25,000 term is 5 months

Q: Problem # 3 For an interest rate of 8% per year, compounded every 2 months, determine the nominal…

A: Solution:- Nominal interest rate for the period means the interest rate charged per annum compounded…

Q: Sam owns a yogurt drink van. She is buying yogurt from a supplier for £0.50 per bottle and sells for…

A: Contribution per unit = Selling price per unit - Variable cost per unit As insurance and salary…

Q: Performance evaluation allows us to assess the performance of fund managers going beyond historical…

A: The total risk is divided into two parts- 1. Systematic Risk that cannot be diversified…

Q: The stock KZ has an equity beta of 1.8. The market risk premium is 5% and the current risk-free rate…

A: Ke (required return) = Risk free rate + (Beta x Market risk premium)

Q: Why do i need to divide by 2?

A: Given: The bonds make semiannual coupon payments

Q: A. Average age of inventory + average collection period – average payment period. B. Average…

A: Cash conversion cycle indicates the number of days a firm takes to churn its inventory to generate…

Q: b) Bank A gives an interest of 8.31% compounded semi-annually, while Bank B 8.2% compounded monthly.…

A: More is compounding of interest than more is effective interest and it is good for investment…

Q: You want to buy a $188,000 home. You plan to pay 20% as a down payment, and take out a 30 year loan…

A: Given Cost of house is $188000 Down payment is 20%

Q: A project has the following cash flows: Year Cash flows -$85 0 123 30 35 40 If the required return…

A: Given: Year Cash flows 0 -$85 1 $30 2 $35 3 $40

Q: Question 2 Jeanius plc is considering an investment of £10 million in a new trouser production…

A: The initial Cash flow requirement is 10 million The required return is 7.5% Total units of…

Q: Bellamee Ltd has bonds outstanding with five years to maturity and are priced at $920.87. If the…

A: Face Value = $1,000 Coupon Rate = 7% Time Period = 5 years Price = $920.87

Q: Consider a European call on Procter and Gamble stock (PG) that expires in one period. The current…

Q: You want to be able to withdraw $35,000 each year for 25 years. Your account earns 5% interest. a)…

Q: The size of the replacement payment is $ (Round to the nearest cent as needed. Round all…

A: We first need to find the FV of the loan that was due 3 months ago using the formula below FV1900 =…

Q: What’s the interest rate of a 8-year, annual $3,500 annuity with present value of $20,000? (Use a…

A: Given Term is 8 years Annuity payment is $3500 PV is $20,000

Q: ● Suppose you have a two-security portfolio containing bonds A and B. The book value of bond A is…

A: Solution: Modified duration measures the sensitivity of bond price with respect to one percent…

Q: Using the Treasury yield information in part c, calculate the following rates using geometric…

A: Data given: Maturity (year) Yield 1 5.37% 2 5.42% 3 5.58% 4 5.64% 5 5.56% 10 5.68%…

Q: Consider the following information about the various states of economy and the returns of various…

A: State of the Economy Probability T-Bills Philips Pay-up Rubber made Market Index Recession 0.2 7%…

Q: Jarett & Sons' common stock currently trades at $30.00 a share. It is expected to pay an annual…

A: Solution:- Cost of common equity means the rate of return required by the equity shareholders. As…

Q: A debt is to be paid with 24 equal quarterly installments and an interest rate of 36% NM. If once…

A: Interest Rate 36% New Installments $ 6,80,000.00 Time Period of refinance (Months) 12…

Q: Task 2: Assume that a risk manager estimates the following probabilities of various losses for a…

A: Expected Loss is sum of all values of possible losses multiplied by probability of occuring that…

Q: Compare

A: Advantages of stock investment and disadvantages of bond investment 1. One can be a billionaire by…

Q: You have borrowed $ 14300 at a compound annual interest rate of 15%. You feel that you will be able…

A: Here, Borrowed amount (PV) $ 14,300.00 Interest rate (RATE) 15.00% Annual payments (PMT) $…

Q: Alpha Consulting LLP has 1mln common shares outstanding with a total market value of £20mln. The…

A: We have; Common shares outstanding as 1 million The total market Value is £20mln The expected…

Q: nsider a stock worth K12.50 that can go up or down by 15% per period. Assume a period process of…

A: Call options gives opportunity to buy the stock on expiration period but there is no obligation to…

Q: You own a portfolio that is 31 percent invested in Stock X, 46 percent in Stock Y, and 23 percent in…

A: Expected return =Sum of ( Probability * Return )

Q: A close family friend has approached you to help her determine which of the two common stocks she…

Q: Use the following information about Sunoco stock. 52 weeks VOL NET HI LO CHG STOCK DIV YLD% P/E…

A: We are given data and information about a stock called Sunoco. We need to use these data points to…

Q: Given a 4 percent interest rate, compute the year 6 future value of deposits made in years 1, 2, 3,…

A: Here, To Find: Future value after 6 years =?

Q: Solve for the missing item in the following. Note: Do not round intermediate calculations. Round…

A: Interest rate (r) = 0.0525 Period (n) - 3.5 Years Interest rate (I) = $300 Principal (P) = ?

Q: A firm raises capital by selling $35,000 worth of debt with flotation costs equal to 3% of its par…

A: Par Value is $1,000 The annual coupon rate is 11% Time period is 15 years Flotation cost is 3% of…

Q: The following information is currently available for Canadian dollar (CS) options: Put option…

A: Strangle option strategy involves both call and put options at different strike prices but on the…

Q: You are depositing $10,000 in a 5 year CD that pays 4.5% interest each year. How much interest will…

A: Interest Accrued = [ P (1+r)n ]- P where P= Principal Amount Deposited n=Term of Deposit r= Interest…

Q: Radoski Corporation's bonds make an annual coupon payment of 7.35% every year. The bonds have a par…

A: Annual coupon payment on bond = Coupon rate×Par value = 0.0735×$1000 = $73.50 Yield to maturity on…

Q: You believe you have found a trading strategy that could make significant profits. It requires…

A: Efficient market hypothesis advocates for complete discounting of any kind of information in the…

Q: Explain how cash flows are esrimated for captial budgeting. What are sunk costs and opportunity…

A: Capital budgeting is an important aspect of finance. It is the process through which a company…

Q: true of false with explanation Under the Australian imputation system any taxes paid by Australian…

A: An Australian company would pay company tax on its profits and the company would keep track of the…

Q: A person invests $2000 in an account at 10% interest compounded annually. When will the value of the…

A: The simple interest rate is different than the compounded rate of interest. The compounding interest…

Q: You wish to buy a $21,500 car. The dealer offers you a 6-year loan with a 7.2 percent APR. What are…

A: Given Price of car is $21500 Term is 6 years rate is 7.2%

Q: Poisson Calculators has found that it is indifferent between purchasing a high-capacity vacuum…

A: Data given: Sales =1900 units per month. High-capacity machine: Price of each calculator=$70 Cash…

Q: حص Summer Leisure unlimined purchased a Color printer for $1,134. Devivory Cost totaled handling…

A: Solution:- Depreciation is the wear and tear cost of an asset. It is the cost of using an asset. As…

Q: You want to buy a $30,000 car. You can make a 10% down payment, and will finance the balance with a…

A: Data given: Cost= $30,000 Down payment=10% Interest rate=3% N=5 years Required: Monthly payment

Q: What happens to the time value as the stock price rises? Why?

A: As per the concept of the time value of money, a dollar received today is valued more than a dollar…

Q: Millennial Manufacturing has net credit sales for 2018 in the amount of $1,443,630, beginning…

A: A. Average Accounts receivable = (Opening accounts receivable balance + Closing accounts receivable…

Q: Which of the following is typically a feature of common stock? A) Most common stocks are callable.…

A: Common stock provides ownership of the company to its holders in exchange for equity. The common…

Q: Marvellous Company has a degree of cash flow operating leverage equal to 1.25. If the company's…

A: Given: Operating leverage = 1.25 EBITDA = $1,000 depreciation and amortization expense = $50 EBITDA…

Q: Annapurna Trading Ltd. is evaluating two mutually exclusive projects: Project A and Project B. The…

A: As per the given information: Project A Project B Year Profit after taxes (in Rs) Profit…

Q: nes Company has a margin of safety percentage of 20%. The break-even point is £200,000 and the…

A: Break even sales is at which there is no loss and no profit and all costs are covered and margin of…

Concept explainers

Loans

A loan is a term that we are all familiar with. The processing of loans is one of the most important functions of a bank. It keeps our economy stable and facilitates the implementation of monetary policies. Let's take a look at the different forms of loans and get some answers to some common questions.

Question

REFINANCNG. If a current mortgage payment of $4500 per month can
be reduced to $3100 per month by refinancing, how many months would you
need to remain in the house to recoup refinancing charges of $18,500? (Round
up to the nearest month.)

Expert Solution

This question has been solved!

Explore an expertly crafted, step-by-step solution for a thorough understanding of key concepts.

This is a popular solution!

SEE SOLUTION Check out a sample Q&A here

Step 1

VIEW

Step 2

VIEW

Trending now

This is a popular solution!

Step by step

Solved in 2 steps

SEE SOLUTION Check out a sample Q&A here

Knowledge Booster

Learn more about

Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, finance and related others by exploring similar questions and additional content below.

Similar questions

Calculating interest and APR of installment loan. Assuming that interest is the only finance charge, how much interest would be paid on a 5,000 installment loan to be repaid in 36 monthly installments of 166.10? What is the APR on this loan?
Calculating and comparing add-on and simple interest loans. Eli Nelson is borrowing 10,000 for five years at 7 percent. Payments, which are made on a monthly basis, are determined using the add-on method. a. How much total interest will Eli pay on the loan if it is held for the full five-year term? b. What are Elis monthly payments? c. How much higher are the monthly payments under the add-on method than under the simple interest method?
Del Hawley, owner of Hawleys Hardware, is negotiating with First City Bank for a 1-year loan of 50,000. First City has offered Hawley the alternatives listed here. Calculate the effective annual interest rate for each alternative. Which alternative has the lowest effective annual interest rate? a. A 12% annual rate on a simple interest loan, with no compensating balance required and interest due at the end of the year b. A 9% annual rate on a simple interest loan, with a 20% compensating balance required and interest due at the end of the year c. An 8.75% annual rate on a discounted loan, with a 15% compensating balance d. Interest figured as 8% of the 50,000 amount, payable at the end of the year, but with the loan amount repayable in monthly installments during the year
Calculating single-payment loan amount due at maturity. Stanley Price plans to borrow 8,000 for five years. The loan will be repaid with a single payment after five years, and the interest on the loan will be computed using the simple interest method at an annual rate of 6 percent. How much will Stanley have to pay in five years? How much will he have to pay at maturity if hes required to make annual interest payments at the end of each year?
A home buyer signed a 20-year, 8% mortgage for $72,500. Payments of the mortgage should be made every six months. Given the following information, how much should the semi-annual loan payments be? USE TIME VALUE TABLES WITH 3 DECIMAL PLACES Seleccione una: O $7,384 O $15,588 $3,663 $5,800 $1,584
If you buy a computer directly from the manufacturer for $2,241 and agree to repay it in 48equal installments at 1.7% interest per month on the unpaid balance, how much are your monthly payments? A $154,600 mortgage for 15 years for a new home is obtained at the rate of 9.7% compounded monthly. Find (a) the monthly payment, (b) the interest in the first payment, (c) the principal repaid in the first payment, and (d) the finance charge
The interest rate for the first four years of an $89,000 mortgage loan is 8.3% compounded semiannually. Monthly payments are calculated using a 20-year amortization.a. What will be the principal balance at the end of the four-year term? (Do not round intermediate calculations and round your final answer to 2 decimal places.)Principal balance $ b. What will be the monthly payments if the loan is renewed at 5.7% compounded semiannually (and the original amortization period is continued)? (Do not round intermediate calculations and round your final answer to 2 decimal places.)Payment $ per month
Hard Rock Paving Company is applying for a loan. It is your job to determine how much they will be able to borrow. They will not be making any payments for the first 15 months. After that, they will make payments of $1,000 per month for four years. There is no interest-free grace period. The first $1,000 payment will be made 15 months after the loan is received. If the interest rate is 13.2% compounded monthly, how much can they expect to borrow?
Using a spreadsheet program, create an amortization schedule for a 30-year mortgage of $500,000 at an annual interest rate of 4.24%. (a) In which month does the amount of principal in a monthly payment first exceed the amount of interest? _____ (b) How much interest is repaid for the term of the loan? (Round your answer to the nearest cent.) _____$ (c) If the loan amount was $750,000 instead of $500,000, would the month in which the amount of principal in a monthly payment first exceeded the amount of interest change?
In order to solve this question, would I use the compounded monthly formula and then subtract the balance between the difference? 36. If $50,000 is borrowed for a home mortgage, to be repaid at 10% interest over 30 years, what is the remaining loan balance after 20 years? Assume monthly payments are made. a. $50,000b. $42,957 c. $32,590 D. $33,203e. $20,651
A borrower obtains a partially amortizing constant payment mortgage loan for $75,000 at 24 percent for 2 years. Payments are monthly. After the last constant payment, he has to pay $12,000 to payback the remaining loan on maturity date. What will be the amount of remaining balance at the end of the second month? (Answer is rounded)
The owner of the Pink Flamingo Motel borrowed $19 500.00 at 8.11% compounded semi-annually and agreed to repay the loan by making payments of $1110.00 at the end of every three months. a) How many payments will be needed to repay the loan? b) How much will be owed at the end of five years? c) How much of the payments made at the end of five years will be interest?