You are ready to buy a house and you have $15,000 for a down payment and closing costs. Closing costs are estimated to be 4% of the loan value. You have an annual salary of $48,000, The bank is willing to allow your monthly mortgage payment to be equal to 30% of your monthly income. The interest rate on the loan is 4.0% per year with monthly compounding for a 30-year fixed rate loan. Provide answers in whole dollars, no decimals, no dollar sign, eg., 120514. A) How much money will the bank loan you? B) How much can you offer for the house?
You are ready to buy a house and you have $15,000 for a down payment and closing costs. Closing costs are estimated to be 4% of the loan value. You have an annual salary of $48,000, The bank is willing to allow your monthly mortgage payment to be equal to 30% of your monthly income. The interest rate on the loan is 4.0% per year with monthly compounding for a 30-year fixed rate loan. Provide answers in whole dollars, no decimals, no dollar sign, eg., 120514. A) How much money will the bank loan you? B) How much can you offer for the house?
PFIN (with PFIN Online, 1 term (6 months) Printed Access Card) (New, Engaging Titles from 4LTR Press)
6th Edition
ISBN:9781337117005
Author:Randall Billingsley, Lawrence J. Gitman, Michael D. Joehnk
Publisher:Randall Billingsley, Lawrence J. Gitman, Michael D. Joehnk
Chapter7: Using Consumer Loans
Section: Chapter Questions
Problem 9FPE
Related questions
Question
Ñ3
Transcribed Image Text:Question 1
You are ready to buy a house and you have $15,000 for a down payment and closing costs.
Closing costs are estimated to be 4% of the loan value.
You have an annual salary of $48,000.
The bank is willing to allow your monthly mortgage payment to be equal to 30% of your monthly income.
The interest rate on the loan is 4.0% per year with monthly compounding for a 30-year fixed rate loan.
Provide answers in whole dollars, no decimals, no dollar sign, e.g., 120514.
A) How much money will the bank loan you?
B) How much can you offer for the house?
Question 2
Suppose you want to borrow $30,000 for a new car.
You can borrow at 5% per year, compounded monthly.
If you take a 4 year loan, what is your monthly payment?
Since the monthly payment is an outflow, enter your answer as a negative number, rounded to two decimals, no dollar sign,
e.g. 217.34.
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!
Trending now
This is a popular solution!
Step by step
Solved in 2 steps with 1 images
Recommended textbooks for you
PFIN (with PFIN Online, 1 term (6 months) Printed…
Finance
ISBN:
9781337117005
Author:
Randall Billingsley, Lawrence J. Gitman, Michael D. Joehnk
Publisher:
Cengage Learning
Pfin (with Mindtap, 1 Term Printed Access Card) (…
Finance
ISBN:
9780357033609
Author:
Randall Billingsley, Lawrence J. Gitman, Michael D. Joehnk
Publisher:
Cengage Learning
Principles of Accounting Volume 2
Accounting
ISBN:
9781947172609
Author:
OpenStax
Publisher:
OpenStax College
PFIN (with PFIN Online, 1 term (6 months) Printed…
Finance
ISBN:
9781337117005
Author:
Randall Billingsley, Lawrence J. Gitman, Michael D. Joehnk
Publisher:
Cengage Learning
Pfin (with Mindtap, 1 Term Printed Access Card) (…
Finance
ISBN:
9780357033609
Author:
Randall Billingsley, Lawrence J. Gitman, Michael D. Joehnk
Publisher:
Cengage Learning
Principles of Accounting Volume 2
Accounting
ISBN:
9781947172609
Author:
OpenStax
Publisher:
OpenStax College
Intermediate Financial Management (MindTap Course…
Finance
ISBN:
9781337395083
Author:
Eugene F. Brigham, Phillip R. Daves
Publisher:
Cengage Learning
Cornerstones of Financial Accounting
Accounting
ISBN:
9781337690881
Author:
Jay Rich, Jeff Jones
Publisher:
Cengage Learning
EBK CONTEMPORARY FINANCIAL MANAGEMENT
Finance
ISBN:
9781337514835
Author:
MOYER
Publisher:
CENGAGE LEARNING - CONSIGNMENT