Personal Finance (MindTap Course List)
13th Edition
ISBN: 9781337099752
Author: E. Thomas Garman, Raymond Forgue
Publisher: Cengage Learning
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Case, Part 1: Velma, a 59-year-old minority woman who works as a teacher, contacts you about getting a loan to purchase a condominium. As you’re chatting, she indicates that she’s hoping to retire from teaching in three years. You take her financial and personal information and see that you should be able to get her the amount she needs to purchase the home, and now you need to discuss terms. You share some loan options with her and she insists that she’s only interested in an adjustable rate mortgage, because she wants the lower monthly payments to start and is convinced the interest rates will stay low or go down even further.
1. What should you share with Velma about an ARM loan given her situation? Are you obligated to help her apply for the loan she wants?
Anne Murray is planning to buy a rental property, in addition to the family home she and Henry own. She is considering a property in Bristol costing £210,000. She has savings of £85,000 which she will use as a deposit but will need to borrow the remaining amount for the purchase. She has had a fixed-rate mortgage agreed in principle by Royal East Bank, for which she will be charged 4.75% interest.
She wants to know what income she might expect to get on her investment. Local agents have estimated that the monthly rent may be £1,450 per month, with agent’s fees for managing the property being charged at 5% of the rent.
Provide Anne with an estimate of the relevant costs of renting the property and the net rental income that she might expect to get. Anne has estimates for some of the other costs she will incur as follows:
Repairs and maintenance per year
£700
Property insurance per year
£395
Mortgage arrangement fee
£1950…
Anne Murray is planning to buy a rental property, in addition to the family home she and Henry own. She is considering a property in Bristol costing £210,000. She has savings of £85,000 which she will use as a deposit but will need to borrow the remaining amount for the purchase. She has had a fixed-rate mortgage agreed in principle by Royal East Bank, for which she will be charged 4.75% interest.
She wants to know what income she might expect to get on her investment. Local agents have estimated that the monthly rent may be £1,450 per month, with agent’s fees for managing the property being charged at 5% of the rent.
Provide Anne with an estimate of the relevant costs of renting the property and the net rental income that she might expect to get. Anne has estimates for some of the other costs she will incur as follows:
Repairs and maintenance per year
£700
Property insurance per year
£395
Mortgage arrangement fee
£1950…
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- Create journal entries for the four scenarios (below). Please provide exceell file if possible. Scenario 1 On 15 Jan, John and Mary borrow $62.50 to purchase feeder chickens to fatten and sell in the local market. The interest rate is 30%. Scenario 2 On 18 Jan, John and Mary purchase $62.50 worth of feeder chickens with the cash they received from the loan. Scenario 3 On 2 Feb, John's father dies, leaving John and Mary $375 as an inheritance. John contributes the money to their farming business. Scenario 4 On 15 Mar, John and Mary sell their remaining maize to a purchasing agent for $812.50.arrow_forwardFor some reason I can not get my numbers right for this. Can you please explain step by step for the solution. Sharon Fox decided to buy a home in Marblehead, Massachusetts, for $265,000. The rest of the question is below.arrow_forwardKareem owns 100% of an apartment building in California but hasn't been there since he signed the purchase agreement. His son Shaquille lives nearby and manages the property day to day taking care of all of the tenant's needs. Larry works in the management office and collects all of the rent checks and takes them to the bank. Which of the following statements is TRUE? a.Group of answer choices Shaquille recognizes the rental income if Larry deposits the money in Shaquille's bank account. b.Kareem recognizes the rental income because he owns the building. c. Shaquille recognizes the rental income because he manages the apartment building and is responsible to the tenants. d.Larry recognizes the rental income because he has constructive receiptarrow_forward
- Mary has found a beautiful home on Richmond Rd. that she loves.The price of the home is $285,000. If Mary and George qualify for a30-year loan at a fixed interest rate of 3.99%, can they afford thehome? (Hint: Don't forget about the down payment!) 4. Mary and George finally decide on a 3 bedroom home on ManchesterCt. The price of the home is $188,000. a) What is the total amount the couple will have to finance? b) If the couple purchases the home on a 30-year loan at a fixedinterest rate of 3.99%, what will be their monthly payment? c) What is the total cost of the home using the 30-year loan.(Hint: Don't forget to include the down payment!) d) How much of the total cost is interest? e) Mary's friend, Beth, suggests they check into a 15 year loan and comparethe monthly payments and the overall cost of the home. If Mary andGeorge purchase the home on a 15-year loan with a fixed interest rate of3.99%, what with be their monthly payment? f) What is the total cost of the home using the…arrow_forwardSuppose you are 28 and married. You and your spouse file for income taxes jointly. You are in the 25% tax bracket. You are considering a few personal investment issues. Suppose you expect a significant career or family change in three years, which requires substantial initial capital commitment (e.g., starting your own business, relocating abroad, buying a house, children going to college, etc.). Which of the following seems to be the most appropriate investment strategy? a.Take a loan to buy an investment condo. b.Use your savings to buy a small number of stocks that you believe to rise in price. c.Use your savings to buy well-diversified stock mutual fund shares. d.Use your savings to buy well-diversified bond mutual fund shares.arrow_forward
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