Jerry bought a house for $400,000 and made an $80,000 down payment. He obtained a 30-year loan for the remaining amount. Payments were made monthly. The nominal annual interest rate was 6%. After 10 years (120 payments) he sold the house and paid off the loan’s remaining balance. (a)What was his monthly loan payment? (b)What must he have paid (in addition to his regular 120th monthly payment) to pay off the loan?

Jerry bought a house for $400,000 and made an $80,000 down payment. He obtained a 30-year loan for the remaining amount. Payments were made monthly. The nominal annual interest rate was 6%. After 10 years (120 payments) he sold the house and paid off the loan’s remaining balance. (a)What was his monthly loan payment? (b)What must he have paid (in addition to his regular 120th monthly payment) to pay off the loan?

EBK CFIN

6th Edition

ISBN:9781337671743

Author:BESLEY

Publisher:BESLEY

Chapter4: Time Value Of Money

Section: Chapter Questions

Problem 25PROB

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Jerry bought a house for $400,000 and made an $80,000 down payment. He obtained a 30-year loan for the remaining amount. Payments were made monthly. The nominal annual interest rate was 6%. After 10 years (120 payments) he sold the house and paid off the loan’s remaining balance. (a) What was his monthly loan payment?(b) What must he have paid (in addition to his regular 120th monthly payment) to pay off the loan?
Carlos purchased a house for $230,000; he paid $11500 as a down payment and financed the balance amount at 3.9% compounded monthly for 25 years. the monthly payment is 1141.293. a) What was the amount of interest charged for the entire loan? b) If Carlos pays an additional $100 per month, how many periods will it take to pay off the load? c) If Carlos pays an additional $100 per month, how much interest will be saved?
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3. Scott purchased a house for $375,000. She made a down payment of 20.00% of the value of the house and received a mortgage for the rest of the amount at 4.72% compounded semi-annually amortized over 20 years. The interest rate was fixed for a 7 year period. a. Calculate the monthly payment amount. b. Calculate the principal balance at the end of the 7 year term. c. Calculate the monthly payment amount if the mortgage was renewed for another years at 3.82% compounded semi-annually? ROUND ALL ANSWERS TO THE NEAREST CENT USE EXCEL FOR PRECISE ANSWERS