FOCUS ON PERSONAL FINANCE W/CONNECT IA
6th Edition
ISBN: 2818440048821
Author: Kapoor
Publisher: MCG
expand_more
expand_more
format_list_bulleted
Videos
Question
Chapter 5, Problem 1P
Summary Introduction
To determine: The maximum amount person S can borrow.
Expert Solution & Answer
Explanation of Solution
Computation:
Want to see more full solutions like this?
Subscribe now to access step-by-step solutions to millions of textbook problems written by subject matter experts!
Students have asked these similar questions
A few years ago, Michael purchased a home for $298,000. Today the home is worth $440,000. His remaining mortgage balance is $108,000. Assuming Michael can borrow up to 80 percent of the market value of his home, what is the maximum amount he can borrow?
Your parents purchased their home 15 years ago. At the time, the house cost them $400,000, but they put 15% down on the cost when they bought it. Your parents financed their purchase over 30 years, with 5.0% fixed rate loan, with monthly payments. What is their current balance of their loan?
Booker graduated from Baruch 10 years ago and now wants to buy his first condo. He has saved enough for a $100,000 down payment and now wants to get a $400,000 mortgage to cover the cost of his new $500,000 home. His bank is offering him either a 3% 15-year mortgage or a 4% 30-year mortgage.
What would be the total amount he would have to pay for the 3% 15-year mortgage (interest and principal)? and
What would be the total amount he would have to pay for the 4% 30-year mortgage (interest and principal)?
Chapter 5 Solutions
FOCUS ON PERSONAL FINANCE W/CONNECT IA
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
- Ten years ago Jim took a mortgage loan of $200,000 to be repaid in 20 equal annual installments of $30,197.34. The bank has told him that they would accept $145,000 today as payment in full for the remainder of the loan. What is the balance on this loan? If we assume that Jim has the money, what interest rate must he earn on alternative investments in order not to accept the bank offer?arrow_forwardNate agreed to pay $550,000 for a house. He made a $125,000 down payment and financed the balance using a 30-year, 9 % per annum compounded monthly conventional loan. a) How much were his monthly payments? b) If he sold the house for $700,000 after 6 years, how much equity did he have in the house? c) How much is his contribution to his loan (Principal and Interest)?arrow_forwardBooker graduated from Baruch 10 years ago and now wants to buy his first condo. He has saved enough for a $100,000 down payment and now wants to get a $400,000 mortgage to cover the cost of his new $500,000 home. His bank is offering him either a 3% 15-year mortgage or a 4% 30-year mortgage. How much would he have to pay each month for the 3% 15-year mortgage? and How much would he have to pay each month for the 4% 30-year mortgage?arrow_forward
- Gary wants to save $555,000 in 5 years, he currently has $225,000 in an investment. Due to financialconstraints, he is unable to add to this investment. What interest rate must he earn to achieve his goal?arrow_forwardTom borrowed $80,000 at a rate of 6.5% from bank for his new house. This is a 30 year monthly paid fully amortized mortgage. By how much would he reduce the amount he owes in the first year? Group of answer choices 678 0 894 1120arrow_forwardJino sold his house. In addition to cash, he took a mortgage on the house. The mortgage will be paid off by monthly payments of P12, 345 for 10 years. He decided to sell the mortgage to a local bank. The bank will buy the mortgage, but requires a 1% per month interest rate on their investment. How much will the bank pay for the mortgage?arrow_forward
- The Jeffersons are considering selling their current residence, buying a small home near Avery’s parents for $220,000 with a $100,000 30-year mortgage at 3.5%, and investing the net proceeds in their retirement accounts and education accounts. They assume they will incur 2% in transaction costs for the purchase and 6% for the sale. They have asked you the following: What will their monthly payment (principal and interest only) be on their new home if their new mortgage is the 3.5% on $100,000 for 30 years that they project? How much cash would they have available for other goals if they sell their old house for $330,000 and buy a new house for $220,000? Assume the mortgage they pay off is $56,000 and they pay the transaction costs for both homes from the proceeds of the sale of their current home. Also assume they take a $100,000 mortgage on the new home. If the Jeffersons purchase the new house and start a $100,000 30-year mortgage at 3.5% one year from today, what will be the…arrow_forwardMr. and Mrs. Smith have just purchased a $600,000 house and have made a down payment of$120,000. They can amortize the balance at 4% for 30 years. Using Excel, calculate equity they have in their house (that is, what is the sum of the down payment and amount paid on the loan) after 20 years?arrow_forwardRob, a friend of yours, has recently purchased a home for $125,000, paying $25,000 down and the remainder financed by a 10.5% twenty-year mortgage , payable at $998.38 a month. At the end of the first month, Rob receives a statement from the bank indicating that only $123.38 of principle was paid during the month. At this rate, he calculates it will take over 67 years to pay off the mortgage. Is he right? Discuss.arrow_forward
- A couple purchased a home 20 years ago for $200,000. The home was financed by paying 10% down andsigning a 30-year mortgage at 12% compounded monthly on the unpaid balance. The net market value of thehome is now $2,500,000, and the couple wishes to sell the house.(a) How much was the monthly loan payment?arrow_forwardRT is about to loan his granddaughter Cynthia $20,000 for 1 year. RT’s TVOM, based upon his current investment earnings, is 12%, and he has no desire to loan money for a lower rate. Cynthia is currently earning 8% on her investments, but they are not easily available to her, and she is willing to pay up to $2,000 interest for the 1-year loan. Solve, a. Should they be able to successfully negotiate the terms of this loan? b. If so, what range of pay backs would be mutually satisfactory? If not, how many dollars off is each person from reaching an agreement?arrow_forwardYour sister bought a condominium unit for P9 300 000 through a condominium loan which she availed of from a universal bank at a fixed annual rate of 8% for 10 years.A. What amount is financed by the bank if she is required to pay an equity of 30% of the total price of the condominium?B. How much would be your sister’s monthly amortization if she is required to pay an equity of 30% of the total price of the condominium?arrow_forward
arrow_back_ios
SEE MORE QUESTIONS
arrow_forward_ios
Recommended textbooks for you
Excel Applications for Accounting PrinciplesAccountingISBN:9781111581565Author:Gaylord N. SmithPublisher:Cengage Learning
Excel Applications for Accounting Principles
Accounting
ISBN:9781111581565
Author:Gaylord N. Smith
Publisher:Cengage Learning
The Economics Of MARRIAGE; Author: Economic Raven;https://www.youtube.com/watch?v=I_M3RIMWju8;License: Standard Youtube License