- Three years ago you bought a home for $150,000 using a fully amortizing loan with a 5% down payment, an interest rate of 4.5%, and a term of 30 years. The loan is fully amortizing. If you sell the house today for $160,000, and you have to pay your real estate agent a 6% commission, what is the annual growth rate of your equity (down payment) over the 3 years? Ignore the monthly payment for purposes of this calculation. a. 23.59% b. 18.49% c. -3.5% d. 10.2%

- Three years ago you bought a home for $150,000 using a fully amortizing loan with a 5% down payment, an interest rate of 4.5%, and a term of 30 years. The loan is fully amortizing. If you sell the house today for $160,000, and you have to pay your real estate agent a 6% commission, what is the annual growth rate of your equity (down payment) over the 3 years? Ignore the monthly payment for purposes of this calculation. a. 23.59% b. 18.49% c. -3.5% d. 10.2%

Essentials Of Investments

11th Edition

ISBN:9781260013924

Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.

Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.

Chapter1: Investments: Background And Issues

Section: Chapter Questions

Problem 1PS

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. You borrow $2mn at an interest rate of 5% per year to purchase a real estate property for the cost of $2.5mn. The borrowing costs are due only at the end of the year. (a) Suppose you sell the property for $2.7mn at the end of the year. What is the return on your equity? (b) Suppose the price of the property declines to $2.3mn after one year. What is the return on your equity? (c) Suppose the interest rate at which you can borrow is 1%. How do your answers change?
. Suppose you want to purchase a home for $440,000 with a 30-year mortgage at 4.24% interest. Suppose also that you can put down 25%. Find (a) What are the monthly payments? (b) What is the total amount paid for principal and interest? (c) What is the amount saved if this home is financed for 15 years instead of for 30 years?
Suppose you want to purchase a home for $525,000 with a 30-year mortgage at 4.84% interest. Suppose also that you can put down 30%. What are the monthly payments? (Round your answer to the nearest cent.) $ What is the total amount paid for principal and interest? (Round your answer to the nearest cent.) $ What is the amount saved if this home is financed for 15 years instead of for 30 years? (Round your answer to the nearest cent.)
Suppose that 10 years ago you bought a home for $170,000, paying 10% as a down payment, and financing the rest at 7% interest for 30 years. How much total interest will you pay over the life of the existing loan?
Suppose you want to purchase a home for $425,000 with a 30-year mortgage at 5.74% interest. Suppose also that you can put down 30%. What are the monthly payments? (Round your answer to the nearest cent.)$ What is the total amount paid for principal and interest together? (Round your answer to the nearest cent.)$ What is the amount saved if this home is financed for 15 years instead of for 30 years? (Round your answer to the nearest cent.)$
Suppose you want to purchase a home for $525,000 with a 30-year mortgage at 5.54% interest. Suppose also that you can put down 25%. What are the monthly payments? (Round your answer to the nearest cent.) 2$ What is the total amount paid for principal and interest? (Round your answer to the nearest cent.) 24 What is the amount saved if this home is financed for 15 years instead of for 30 years? (Round your answer to the nearest cent.) 2$ Need Help? Read It
Suppose that you wish to buy a new home that will cost you $452,847. You must put $80,000 down, and the bank offers you a 5-year 5.1% APR negative amortization loan with a payments $1,258 per month, and a balloon payment of $92,233 (your 360th payment). How much will your remaining payments be?
Your new 30-year mortgage includes borrowing $425,000 at an APR of 4.78%. If you paid 20% down when you bought this house, and if the value of the property grows at about 3.0% a year, how much will you have to invest if you sell the house after 14 years? (Ignore here any taxes or fees on the purchase or sale of the house.) PLEASE USE EXCEL TO SOLVE THIS QUESTION!!!
To buy an $180,000 condominium, you put down $30,000 and take out a mortgage for $150,000 at an APR of 9% compounded monthly. Five years later, you sell the house for $205,000 (after all selling expenses are factored in). What equity (the amount that you can keep before any taxes are taken out) would you realize with a 30-year mortgage repayment term? (Assume that the loan is paid off when the condo is sold in lump sum.)
Suppose you take out a $117,000, 20-year mortgage loan to buy a condo. The interest rate on the loan is 5%. To keep things simple, we will assume you make payments on the loan annually at the end of each year. a. What is your annual payment on the loan? b. Construct a mortgage amortization. c. What fraction of your initial loan payment is interest? d. What fraction of your initial loan payment is amortization? e. What is the total of the loan amount paid off after 10 years (halfway through the life of the loan)? f. If the inflation rate is 3%, what is the real value of the first (year-end) payment? g. If the inflation rate is 3%, what is the real value of the last (year-end) payment? h. Now assume the inflation rate is 6% and the real interest rate on the loan is unchanged. What must be the new nominal interest rate? i-1. Recompute the amortization table. i-2. What is the real value of the first (year-end) payment in this high-inflation scenario? j. What is the real value of the last…
Suppose you want to purchase a property for $205,000 and you have $30,000 to put down as a down payment. The property has an existing mortgage that can be wrapped. This loan is a fixed-rate mortgage at 7 percent, monthly payments. This loan had an original balance of $150,000 and has 20 years remaining on its original 30-year term. The current market rate for a new fixed-rate loan is 10.50 percent for 20 years. The seller will give you a wrap loan for an amount equal to the purchase price minus the down payment at 8.75 percent, monthly payments. What is the effective equity yield for the wrap lender if the wrap loan is written for a term equal to the remaining term of the existing mortgage and both are held to maturity?
Using a financial calculator, You can buy property today for $2.1 million and sell it in 6 years for $3.1 million. (You earn no rental income on the property.) If the interest rate is 11%, what is the present value of the sales price?

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