Please explain part b of the question step by step through formula, not excel Question 2:(a) You wish to buy a house. The market value of the house is $650,000 and you have savedup $120,000 as a deposit.(i) What are your monthly repayments if the loan is for 30 years to be repaid on amonthly basis and the interest rate on the loan is 7% per annum nominal?(ii)What is the total amount of interest you expect to pay on the loan?(b) Suppose that after 4 years, interest rates fall to 6.5% per annum nominal. If you re-financethe loan, how much will you save in interest payments? Also assume that the new loan willbe for a period of 26 years.(c) Suppose that after a further 4 years, you decide to buy an investment property valued at$850,000. Assume that interest rates are now at 6.0% per annum nominal.(i) If the market value of your original property is now $800,000, what is your equityin your original property?(ii) If the bank calculates the allowable equity in your property as 80% of the marketvalue of your original property minus the outstanding amount on your originalmortgage, how much can you borrow to fund your investment property?(iii) What are the monthly repayments on your investment property? Also assume thatthis loan will be for a period of 30 years.(iv) Briefly explain whether you would prefer to use negative gearing or positivegearing for your investment property.

Interest Rate = 6.5% Time Period = 26 Years Market Value = $650,000 Down Payment = $120,000

You wish to buy a house. The market value of the house is $650,000 and you have saved $120,000 as a deposit. (i) What are your monthly repayments if the loan is for 30 years to be repaid on a monthly basis and the interest rate on the loan is 7% per annum nominal? (ii)What is the total amount of interest you expect to pay on the loan? Suppose that after 4 years, interest rates fall to 6.5% per annum nominal. If you re-finance loan, how much will you save in interest payments? Also assume that the new loan will for a period of 26 years.

You wish to buy a house. The market value of the house is $650,000 and you have saved $120,000 as a deposit. (i) What are your monthly repayments if the loan is for 30 years to be repaid on a monthly basis and the interest rate on the loan is 7% per annum nominal? (ii)What is the total amount of interest you expect to pay on the loan? Suppose that after 4 years, interest rates fall to 6.5% per annum nominal. If you re-finance loan, how much will you save in interest payments? Also assume that the new loan will for a period of 26 years.

Principles of Accounting Volume 2

19th Edition

ISBN:9781947172609

Author:OpenStax

Publisher:OpenStax

Chapter11: Capital Budgeting Decisions

Section: Chapter Questions

Problem 3PA: Use the tables in Appendix B to answer the following questions. A. If you would like to accumulate...

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