Use function pmt to calculate mortgage payment

Assignment Help Financial Management

Reference no: EM131937315

You are planning to purchase a house that costs $480,000. You plan to put 20% down and borrow the remainder. Based on your credit score, you believe that you will pay 3.99% on a 30-year mortgage.

1. Use function “PMT” to calculate your mortgage payment.

2. Use function “PV” to calculate the loan amount given a payment of $1500 per month. What is the most that you can borrow?

3. Use function “RATE” to calculate the interest rate given a payment of $1500 and a loan amount of $400,000.

4. For each scenario, calculate the total interest that you will have paid once the mortgage is paid off. (There is not a function for this, enter the formula into the cell.)

5. For each scenario, calculate the total cost of the home purchase. (Down payment plus principle (loan amount) plus interest.)

6. Assume that you plan to pay an extra $300 per month on top of your mortgage payment, calculate how long it will take you to pay off the loan given the higher payment. (Use interest rate of 3.99%). Calculate how much interest you will pay in total? Compare this to the value that you calculated for #2. You want to determine whether or not you should save some of your money and put only 10% down on your house. Because you are only putting 10% down, lenders require that you purchase private mortgage insurance (PMI). Assume that PMI is 1% of the mortgage amount.

7. Calculate your total monthly payment (mortgage payment plus PMI).

8. Calculate the total cost of financing your home purchase (interest plus PMI).

9. Calculate the total cost of the home purchase. (Down payment plus principle (loan amount) plus interest plus PMI.) 10. Compare this to the costs associated with a 20% down payment.

Reference no: EM131937315

Questions Cloud

Considering entering laser printing business : Matrix Printers, Inc. is considering entering the laser printing business. What is the NPV of making this investment if the required rate of return is 16%.

Proposed acquisition of new special-purpose truck : You have been asked by the president of your company to evaluate the proposed acquisition of a new special-purpose truck.

Considering replacing canning machine : International Soup Company is considering replacing a canning machine. The machine will be depreciated straight line over its five-year life.

Corresponding cost of capital assume the equity financing : Calculate the corresponding cost of capital assume the equity financing all comes from new issues

Use function pmt to calculate mortgage payment : Use function “PMT” to calculate your mortgage payment. Use function “RATE” to calculate the interest rate given a payment of $1500 and a loan amount of $400,000

How much should you be willing to pay for stock : You are considering the purchase of common stock that paid a dividend of $2.50 yesterday. how much should you be willing to pay for this stock?

What should be the current market price of company stock : If BrandMarts investors demand a 12% rate of return, what should be the current market price of the company's stock?

Hedge your currency exposure : You will be making payment on a shipment of imported goods (CAD100,000) in 6 months and want to hedge your currency exposure.

The firm required rate of return : If the tax rate on ordinary income is 40 percent and the firm’s required rate of return is 16 percent, should the firm purchase the system? Why?

User Account

All Pages