You are interested in a fixed-rate mortgage for $399,500 and need to choose the between options: a 15-year mortgage or a 30-year mortgage. The current mortgage rate is 6.5% for the 15-year mortgage, and 3.75% for the 30-year mortgage. Both require a 15% down payment. (Hint: make use of the amortization formula from Chapter 12). (a) What are the monthly principal and interest payments for EACH loan? Show your work. (b) What is the total amount of interest paid on EACH loan? Show your work. (c) Overall, how much more interest is paid by choosing the 30-year mortgage? Show your work.

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Q: The following certificate of deposit (CD) was released from a particular bank. Find the compound…

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Q: You want to buy a $162,000 home. You plan to pay 20% as a down payment, and take out a 30 year loan…

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Q: Find the present value of the following future amount. $500,000 at 6% compounded quarterly for 30…

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Q: How has your opinion on personal finance changed

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Q: A 14-year zero coupon bond with a face value of $1,000 is currently selling for $44.6. Using the…

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Q: Find the present value of the given future amount. $74,000 for 23 months at 7% simple interest

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Q: Can you explain the working for the Bond Yield (Annual). If I were to work it outside of Excel, how…

A:

Q: A bond has $1,000 face value, coupon rate of 7.3%, and yield to maturity (YTM) of 10.7%. It will…

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Q: The preferred stock of Clara Inc. has a par value of K100 and a K1 dividend payout per month. You…

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Q: Remy obtains a 30-year mortgage in the amount of $625,000 for a co-op. She secures a 7/1 ARM at an…

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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.