User Account

All Pages

Calculate the monthly payment on mortgage

Assignment Help Financial Management
Reference no: EM131065274

(24%) Consider a mortgage borrower who wants to buy a house at the price $280? 000. The bank offers the following mortgage:

Mortgage A: required down payment: length of the mortgage:

fixed mortgage rate: payment frequency:

25% 30 years 6% monthly.

At the end of one year, the remaining balance of mortgage A will be $207? 421.

(1) Calculate the monthly payment on mortgage A, the amount paid on the principal in the first month, and the remaining mortgage balance after the first payment.

Round up the numbers to the first digit after the decimal point.

(2) Calculate the home equity after one year if the house price has increased by 10%. Also calculate the smallest percentage decrease in the house price in the first year that will wipe out the home equity.

 

(3) After one year, the house price has increased by 5% and the 30-year fixed mortgage rate has decreased to 4?8%. Suppose that the homeowner is able to refinance the house with a 30-year mortgage B at the fixed new rate. After paying the refinancing fee $5000 out of the home equity, the remainder of the home equity is used as the down payment in mortgage B. Calculate the monthly payment in mortgage B.

Reference no: EM131065274

Questions Cloud

Considering four-year project to production efficiency : Warmack Machine Shop is considering a four-year project to improve its production efficiency. Buying a new machine press for $390,000 is estimated to result in $150,000 in annual pretax cost savings. The press also requires an initial investment in s..
How many months will it take for facebook to grow its user : How many months will it take for Facebook to grow its user base to two billion users?
Prepare a statement of cash flows : The accounting staff of Lambert Company has assembled the following information for the year ended December 31, 2015: Prepare a statement of cash flows. Use the direct method of reporting cash flows from operating activities
What is the price and bond equivalent yield : A Treasury bill that settles on May 18, 2012, pays $100,000 on August 21, 2012. Assuming a discount rate of .48 percent, what is the price and bond equivalent yield?
Calculate the monthly payment on mortgage : Consider a mortgage borrower who wants to buy a house at the price $280? 000. The bank offers the following mortgage: Mortgage A: required down payment: length of the mortgage: fixed mortgage rate: payment frequency: Calculate the monthly payment on ..
Why highly emotional performance of country blues singers : Why was the highly emotional performance of country blues singers so different than what white teenagers were used to?
Company to make an after-tax operating profit : Company produces one type of sunglasses with the following costs and revenues for the year: What quantity of units is required for PJ Company to make an after-tax operating profit of $1,200,000 for the year?
How come the united states can grow food : You have said that the hunger problem is not the result of overpopulation. But you have not yet answered the most basic and simple question of all: Why can't people feed themselves?
Planning to save for retirement : You are planning to save for retirement over the next 30 years. To save for retirement, you will invest $1,450 a month in a stock account in real dollars and $570 a month in a bond account in real dollars. How much can you withdraw each month from yo..

Reviews

Write a Review

Financial Management Questions & Answers

  Methods for evaluating possible capital projects

What are the various methods for evaluating possible capital projects, in terms of their possible benefits to the firm? Describe the benefits and/or shortcomings of each. What is the NPV profile and what are its uses?

  Sensitivity of single cash flow increases with its maturity

Just as the interest rate sensitivity of a single cash flow increases with its maturity, the interest rate sensitivity of a stream of cash flows increases with its duration. A firm's market capitalization is determined by the difference in the market..

  Financial leverage effects

Firms HL and LL are identical except for their leverage ratios and the interest rates they pay on debt. Each has $16 million in invested capital, has $2.4 million of EBIT, and is in the 40% federal-plus-state tax bracket. Calculate the return on inve..

  Issues an annual bond-what is the yield to maturity

A firm issues an annual bond today with a $1,000 face value, an 8% annual coupon interest rate, and 25-year maturity. An investor purchases the bond for $900. What is the yield to maturity (YTM)?

  Considering selling product

Valles Global Industries (VGI) is considering selling a product. The contract sells parts for revenue of $65 million a year for 5 years. Their initial investment is $250 million and the equipment has no salvage at 5 years. They estimate production co..

  Find the market value of lawrences shares

Common stock value: Variable growth Lawrence Industries’ most recent annual dividend was $1.80 per share (D0 = $1.80), and the firm’s required return is 11%. Find the market value of Lawrence’s shares when:

  Point-of-view of a common shareholder

(a) In your own words, from the point-of-view of a common shareholder, how would you estimate a company’s fundamental or intrinsic value? (b) What are some of the reasons why a company’s fundamental value might significantly exceed its “book value”?

  Expected return-what must the risk-free rate be

A stock has an expected return of 15 percent, its beta is 1.35, and the expected return on the market is 12 percent. What must the risk-free rate be? (Do not round your intermediate calculations.)

  What is the expected dollar return on the gamble

Suppose that a person won the Florida lottery and was offered a choice of two prizes: (1) $500,000 or (2) a coin-toss gamble in which he or she would get $1 million if a head were flipped and zero if a tail. What is the expected dollar return on the ..

  What is the operating cash flow or OCF

Ridiculousness, Inc., has sales of $42,000, costs of $20,300, depreciation expense of $1,900, and interest expense of $900. If the tax rate is 35 percent, what is the operating cash flow, or OCF? (Do not round intermediate calculations.)

  Fixed manufacturing costs-consumer packaged product

Fred Flintstone has just become the product manager for Yabba Dabba Doo, a consumer packaged product with a retail price of $2.00. Retail margins on the product are 33%, while wholesalers take a 12% margin. Fixed manufacturing costs are $1,800,000. T..

  Host of empirical evidence indicates that the gains

A host of empirical evidence indicates that the gains from a typical merger accrue to the shareholders of the target corporation, not to the shareholders of the acquiring corporation. It seems the acquiring corporation should be in the "driver’s seat..

Free Assignment Quote

Assured A++ Grade

Get guaranteed satisfaction & time on delivery in every assignment order you paid with us! We ensure premium quality solution document along with free turntin report!

Submit Assignment

Academics

Major Subjects

Majors

Get In Touch

whatsapp: +1-415-670-9521

Phone: +1-415-670-9521

Email: [email protected]

TERMS & POLICIES

HELP & SUPPORT

All rights reserved! Copyrights ©2019-2020 ExpertsMind IT Educational Pvt Ltd