Interest only amortizing mortgage

Assignment Help Financial Management

Reference no: EM131942933

1. What is the total amount paid (principal and interest) on a $300,000 15/15 interest only amortizing mortgage ( first 15 yers are interest only and second 15 years are fully amortizing) at 8% if the loan will be fully paid off by the end of the 30th year? Ignore the samll negative remaining balance.

A) $842,630

B) $745,398

C) $887,923

D) $928,346

2. You are buying a house and have both the option and the ability to pay $200,000 cash for it. If you don't pay cash, you will have to pay $225,00 and take out a loan for the full amount with a 30 year term. 5.5% interest rate and monthly payments of $1,277.53. You also believe that you can invest the amount that you would pay in cash for the house in the stock market and recieve an annual interest rate of 8% compounded monthly. The present value of the mortage payments is __________ and you _____ _____pay for the house in cash given your assumptions.

A) $206,737 should

B) $206,737 shouldn't

C) 174,106 shouldn't

D) 174,106 should

Reference no: EM131942933

Questions Cloud

Annual cost of the trade credit : What is the effective, or equivalent, annual cost of the trade credit?

What is the current price of bond : Even though most corporate bonds in the United States make coupon payments semiannually, what is the current price of the bond?

What is relationship in liquidity and security portfolio : In terms of asset management what is the relationship between Liquidity, Reserve and the Security Portfolio.

What is the continuously compounded interest rate : What is the continuously compounded interest rate? What is the effective annual rate?

Interest only amortizing mortgage : What is the total amount paid (principal and interest) on a $300,000 15/15 interest only amortizing mortgage.

What is the monthly payment on standard : What is the monthly payment on a standard 30 year fixed rate commercial loan at 6.75% with a balloon payment after 10 years and LTV of 78% on $750,000 property.

What is maximum amount you are willing to invest in deal : If your required rate of return is 17%, what is the maximum amount you are willing to invest in this deal?

About to be liquidated after bankruptcy : Assume that a firm had such serious financial problems that is was about to be liquidated after a bankruptcy.

The loan contract calls for a rate adjustment at end of year : The initial interest rate is 5.5 percent, but the loan contract calls for a rate adjustment at the end of year 5.

User Account

All Pages