Concept explainers
Critical Thinking You have just contracted to buy a house and will seek financing in the amount of . You go to several banks. Bank 1 will lend you at the rate of amortized over 30 years with a loan origination fee of . Bank 2 will lend you at the rate of amortized over 15 years with a loan origination fee of . Bank 3 will lend you at the rate of amortized over 30 years with no loan origination fee. Bank 4 will lend you at the rate of amortized over 15 years with no loan origination fee. Which loan would you take? Why? Be sure to have sound reasons for your choice. Use the information in the table to assist you. If the amount of the monthly payment does not matter to you, which loan would you take? Again, have sound reasons for your choice. Compare your final decision with others in the class. Discuss.
To find: Critical Thinking You have just contracted to buy a house and will seek financing in the amount of . You go to several banks. Bank 1 will lend you at the rate of amortized over 30 years with a loan origination fee of . Bank 2 will lend you at the rate of amortized over 15 years with a loan origination fee of . Bank 3 will lend you at the rate of amortized over 30 years with no loan origination fee. Bank 4 will lend you at the rate of amortized over 15 years with no loan origination fee. Which loan would you take? Why? Be sure to have sound reasons for your choice. Use the information in the table to assist you. If the amount of the monthly payment does not matter to you, which loan would you take? Again, have sound reasons for your choice. Compare your final decision with others in the class. Discuss.
Answer to Problem 75AYU
Solution:
Bank 2
Explanation of Solution
Given:
Bank 1 will lend you at the rate of amortized over 30 years with a loan origination fee of . Bank 2 will lend you at the rate of amortized over 15 years with a loan origination fee of . Bank 3 will lend you at the rate of amortized over 30 years with no loan origination fee. Bank 4 will lend you at the rate of amortized over 15 years with no loan origination fee.
Calculation:
Bank 1:
Number of years: 30
Monthly payment:
Loan Origination fee:
Total amount
Bank 2:
Number of years: 15
Monthly payment:
Loan Origination fee:
Total amount
Bank 3:
Number of years: 30
Monthly payment: 492
Total amount
Bank 4:
Number of years: 15
Monthly payment:
Total amount
I suggest Bank 2 for home loan.
Chapter 5 Solutions
Precalculus Enhanced with Graphing Utilities
Additional Math Textbook Solutions
Thomas' Calculus: Early Transcendentals (14th Edition)
Calculus: Early Transcendentals (2nd Edition)
Calculus: Early Transcendentals (3rd Edition)
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Calculus & Its Applications (14th Edition)
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