Suppose you purchased a house 7 years ago and took out a mortgage for $400,000 with a5.6% interest rate. The mortgage is a 30 year mortgage with monthly payments. Today youcan refinance the loan at a 5% interest rate for a fee of $10,000. Assume that you wouldborrow just enough to repay the old loan and the refinancing fee.MonthlyAnnual Rate Life (In Years) Loan AmountPeriods PaidFeePayments30 $ 400,000.00Initial LoanRefinancing5.6%84 $0 $10,000.005.0%30If you refinance at the new rate, how much will you save per month?Monthly SavingsIf you expect to move in 6 years, would you want to refinance?YearsMonthsTime Till Move72Old LoanNew LoanLoan Balance at MoveNPV of RefinancingRefinance?

Suppose you purchased a house 7 years ago and took out a mortgage for $400,000 with a 5.6% interest rate. The mortgage is a 30 year mortgage with monthly payments. Today you can refinance the loan at a 5% interest rate for a fee of $10,000. Assume that you would borrow just enough to repay the old loan and the refinancing fee. Monthly Payments Annual Rate Life (In Years) Loan Amount Periods Paid Fee 30 $400,000.00 Initial Loan Refinancing 84 $ 0 $10,000.00 5.6% 5.0% 30 If you refinance at the new rate, how much will you save per month? Monthly Savings If you expect to move in 6 years, would you want to refinance? Years Months Time Till Move 6. 72 Old Loan New Loan Loan Balance at Move NPV of Refinancing Refinance?

Suppose you purchased a house 7 years ago and took out a mortgage for $400,000 with a 5.6% interest rate. The mortgage is a 30 year mortgage with monthly payments. Today you can refinance the loan at a 5% interest rate for a fee of $10,000. Assume that you would borrow just enough to repay the old loan and the refinancing fee. Monthly Payments Annual Rate Life (In Years) Loan Amount Periods Paid Fee 30 $400,000.00 Initial Loan Refinancing 84 $ 0 $10,000.00 5.6% 5.0% 30 If you refinance at the new rate, how much will you save per month? Monthly Savings If you expect to move in 6 years, would you want to refinance? Years Months Time Till Move 6. 72 Old Loan New Loan Loan Balance at Move NPV of Refinancing Refinance?

Intermediate Financial Management (MindTap Course List)

13th Edition

ISBN:9781337395083

Author:Eugene F. Brigham, Phillip R. Daves

Publisher:Eugene F. Brigham, Phillip R. Daves

Chapter22: Providing And Obtaining Credit

Section: Chapter Questions

Problem 2P: Cost of Bank Loan Mary Jones recently obtained an equipment loan from a local bank. The loan is for...

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Cost of Bank Loan Mary Jones recently obtained an equipment loan from a local bank. The loan is for 15,000 with a nominal interest rate of 11%. However, this is an installment loan, so the bank also charges add-on interest. Mary must make monthly payments on the loan, and the loan is to be repaid in 1 year. What is the effective annual rate on the loan (assuming a 365-day year)?
Calculating interest and APR of installment loan. Assuming that interest is the only finance charge, how much interest would be paid on a 5,000 installment loan to be repaid in 36 monthly installments of 166.10? What is the APR on this loan?
Calculating and comparing add-on and simple interest loans. Eli Nelson is borrowing 10,000 for five years at 7 percent. Payments, which are made on a monthly basis, are determined using the add-on method. a. How much total interest will Eli pay on the loan if it is held for the full five-year term? b. What are Elis monthly payments? c. How much higher are the monthly payments under the add-on method than under the simple interest method?
Suppose you purchase a home and obtain a 15-year fixed-rate loan of $195,000 at an annual interest rate of 6.0%. a) What is your monthly payment? N: months I %: P.V: $ PMT: $ F.V: 0 P/Y: 12 C/Y: 12 b) Of the first month's mortgage payment, how much is interest? HINT: I=Prt Interest: I=$ c) Of the first month's mortgage payment, how much is applied to the principal? HINT: PMT - Interest Amount Applied to Principal: $ d) How much is your outstanding balance after the first month’s payment? HINT: Principal - Amount Applied to Principal Outstanding Balance after first payment: $
Problem: Please answer the following questions regarding a $300,000 Mortgage Loan with monthly amortization over 30 years and an annual interest rate of 6%. What is the loan payment for a (30 year loan (360 monthly payments) of $300,000 at 6%? Question Answer What is the monthly payment amount? Loan Monthly Payment: How much interest and how much is principle on the first payment? Interest: Principle: How much interest and how much is principle on the second payment? Interest: Principle: If after the second payment an addition $10,000 was paid on principle. How much would the interest be on the third payment? Interest:
The following loan is a simple interest amortized loan with monthly payments. $155000, 9 1/2%, 30 years(a) Find the monthly payment. (Give your answer to the nearest cent.)Payment $ (b) Find the total interest for the given simple interest amortized loan. (Give your answer to the nearest cent.)Total interest $
Suppose you purchase a house for $200,000.00 by getting a mortgage for $180,000.00 and paying a $20,000.00 down payment. If you get a 30-year mortgage with a 7% interest rate p.a. compounded quarterly, what are the quarterly payments? What would the loan balance be at the end of the first year?
The original amount that was borrowed for your home mortgage was 175,000 dollars, to be repaid through monthly payments for 25 years at 5.6% APR . a. Find the amount of the monthly payment that would amortize this loan. b. Suppose you have been making your payments for the last 7 years, and would like to apply for a home equity loan to put an in-ground pool in your yard. Calculate what remains to be paid on your mortgage. c. Calculate the equity you have In your home if your home is currently worth $205,000.
Please show working You get a 15 year, 3.5% fixed-rate mortgage with one point, borrowing $300,000. a. what are your initial payments? b. what is the loan’s APR? c. suppose you prepay after 5 years, what is the outstanding loan balance? d. if you do prepay after 5 years, what is the effective annual rate?
You have just purchased a home by borrowing $400, 000 for 30-years at a fixed APR of 3.87%. The loan payments are monthly and interest is compounded monthly. What is the effective annual rate on the loan? (I.e., what is the interest rate once we take into account compounding?) 0.0394 2.1239 2.0394 1.0394 O O