What is the price range of houses they should consider

Assignment Help Financial Management

Reference no: EM13804318

The Johnsons have accumulated a nest egg of $15,000 that they intend to use as a down payment toward the purchase of a new house. Because their present gross income has placed them in a relatively high tax bracket, they have decided to invest a minimum of $1100/month in monthly payments (to take advantage of the tax deduction) toward the purchase of their house. However, because of other financial obligations, their monthly payments should not exceed $1400. If local mortgage rates are 9.5%/year compounded monthly for a conventional 30-yr mortgage, what is the price range of houses they should consider? (Round your answers to the nearest cent.)

Reference no: EM13804318

Questions Cloud

What is the appropriate cost of capital for the valuation : The average unlevered beta of publicly traded Sodium Chlorate businesses is 0.94. Assume zero debt beta. The target capital structure that is appropriate for Collinsville plant is 35% debt and 65% equity. Assume a risk-free rate of 9.5% and market ri..

What is the present value of a perpetuity : What is the present value of a perpetuity that pays $1,000 per year, beginning one year from now, if the appropriate interest rate is 2%? (Round off to the nearest dollar and ignore the $ sign in your input.)

Concerning proper protection of the ring : Sarah owns a valuable diamond ring that has been in her family for generations. She is told by an appraiser that the ring has a current make value of $50,000. She feels that the ring is adequately insured because she purchased a Homeowners 3 (special..

Net present value of a project that has initial cash outflow : What is the net present value of a project that has an initial cash outflow of $12,670 and the following cash inflows? The required return is 11.5%

What is the price range of houses they should consider : The Johnsons have accumulated a nest egg of $15,000 that they intend to use as a down payment toward the purchase of a new house. Because their present gross income has placed them in a relatively high tax bracket, they have decided to invest a minim..

Calculate the after-tax cash outflow associated with each : JLB Corporation is attempting to determine whether to lease or purchase research equipment. the firm is in the 40% tax bracket, and its after tax cost of debits currently 8%. Annual end-of-year lease payment of $25,200 is required over the 3-year lif..

Common stock to finance long-term expansion of the business : Given that a company does not yet pay dividends, what will be the immediate effect on earnings per share (EPS) by issuing common stock to finance long-term expansion of the business?

Principles of risk management and insurance : Sam, age 35, and Kathy, age 33, are married and have a son, age 1. Sam is employed as an accountant and earns $75,000 annually. Kathy is a professor of finance at a large state university and earns $150,000 annually. Sam is killed instantly in an aut..

User Account

All Pages