Lesson 11 Practice Problems At this point in the course you need to become well
ID: 2649773 • Letter: L
Question
Lesson 11 Practice Problems
At this point in the course you need to become well acquainted with the features of your calculator and the ability to solve basic problems related to real estate finance and the analysis of decision factors regarding real estate. These problems should provide both challenges and real-world applications of the principles covered in the readings and lectures.
These problems should be solved with a financial calculator, but other methods are acceptable.
You just invested $5,000 in a 48-month certificate of deposit (CD) at your local bank. The CD pays 1.5% interest per year compounded monthly. What amount will your CD be worth when it matures?
I am asking a bank to lend me part of the money I need to make a down payment on a duplex I am purchasing. Based on my income projections for the duplex, I can easily afford to pay $700 per month for the next four years. How much will the bank lend me, assuming it requires a 6% annual return on this four-year loan?
You have just entered into a contract to purchase a home. After shopping around, you decide on a $180,000 mortgage from a lender offering a 30-year fixed rate mortgage with monthly payments at an annual interest rate of 7%. What is the monthly loan payment?
In 2006 Juan and Maria purchased a home for $250,000. They were offered a 30-year loan by a mortgage broker for no money down, interest only for the first three years at 3%, then automatically converting to an amortizing loan at 2 points above the prime rate (the prime rate is now 5%). What was their initial monthly payment, and what did it become after the reset?
What does the loan adjustment in problem 4 tell you about the financial crisis in the housing market in 2009?
this is Finance real estate
Explanation / Answer
1)Value of CD after 48 month = FVF @.125%,48months *Present value of deposit
= 1.06180*5000
= $ 5,308.98 (approx)
**Since interest is compunded monthly therefore interest rate per month = 1.50/12= .125%
2)Amount of loan that bank is ready to pay = PVAF@.50%,48months * monthly payment
= 42.5803* 700
= $ 29,806.22
**since installment is paid monthly therefore we will take monthly interest rate = 6/12 =.50 or.50%
**PVAF @.50%,48 MONTH =42.5803 (from annuity table)
**4years = 48 months
3)Monthly payment = PVAF@ .5833% ,360months*monthly payment = Loan amount
= 150.3081 *X = 180000
= $ 1,197.54 monthly
4)a)Initially monthly payment = PVAF@ .25%,360monhs *Monthly payment = Loan amount
= 237.1894 *X= 250000
= $ 1,054.01
so initial monthly payment = $ 1054.01
**Interest per month =3/12 =.25%
**Month = 30*12= 360 month
b)After reset =The interest rate =7% (5%+2%)
Period = 30 years-3years= 27years
Amount of loan outstanding after 3years=233860.40
Monthly payment after 3 years = PVAF@.5833%,324 months *Monthly installment =Loan outstanding
= 145.3877 *X= 233860.40
= $ 1608.53
**Interest rate = 7/12 = .5833%
**Month = (30-3)*12 = 324months
**Loan outstanding=Loan amount -(total installment paid for3 years - interest amount)
= 250000 -(37944.36-250000*3%*PVAF@3%,3years)
= 250000-(37944.36-7500*2.9073)
= 250000-(37944.36-21804.75)
= 250000-16139.60
=$ 233860.40
**Total installment = 1054.01*3*12 =37944.36
c)Increase in lending rate gives a estimation that There is a huge financial crises in a market due to which there is more demand of mortgage loan and thuus interest rate is rising
Related Questions
drjack9650@gmail.com
Navigate
Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.