1.You invest $300 a month at the end of each month for 14 months at an annual ra
ID: 2638305 • Letter: 1
Question
1.You invest $300 a month at the end of each month for 14 months at an annual rate of 3% compounded monthly. How much money would you have at the end of the 14 months?
A.$4269
B.$5126
C.$5348
D.$6233
2.How would the answer to 1 change if you invested the $300 at the beginning of the month instead of the end.
A.$3895
B.$4073
C.$4280
D.$5280
3.You have $700 in your saving account and would like to add to it $100 a month for the next 5-years. If you can earn 4%, what would be the balance of your savings account at the end of the 5 years?
A.$6781
B.$7485
C.$7507
D.$7899
4.You purchased a home for $250,000 and borrowed 80% of the value for 30 years at 4.5%.
Calculate your monthly payment
A.$1013
B.$1052
C.$1298
D.$1367
5.Your gross annual salary is $46,000. Your mortgage monthly payment cannot exceed 28% of your gross monthly income. You are applying for a conventional 30-year mortgage at a 4.8%. Calculate your maximum monthly payment
A.$1073
B.$1125
C.$1166
D.$1221
6.You are eligible for $1026 monthly payment on a 30 year 4.5% fixed rate mortgage. You are interested in a condo whose property taxes are $300 a month and homeowners insurance are $60 a month.
a.How much money can you borrow and what is your monthly payment ?
A.$126,455, $713
B.$129,488, $765
C.$131,442, $666
D.$136,267, $806
b.What is the interest and principle portions of your first payment
A.$333, $333
B.$466, $200
C.$493, $173
D.$500, $166
c.What is the principle balance of your mortgage after 15 years (180 payments)?
A.$87,059
B.$88,533
C.$93,125
D.$100,147
d.How much interest have you paid over the past 15 years (180 payments)?
A.$44,383
B.$49,321
C.$62,830
D.$75,497
e.If you increased your monthly payments by $50, how long would it take you to payoff your mortgage?
A.About 26 years
B.About 28 years
C.About 30 years
D.About 32 years
Explanation / Answer
1.You invest $300 a month at the end of each month for 14 months at an annual rate of 3% compounded monthly. How much money would you have at the end of the 14 months?
Money would you have at the end of the 14 months = fv(rate,nper,pmt,pv)
Money would you have at the end of the 14 months = fv(3%/12,14,300,0)
Money would you have at the end of the 14 months = $ 4268.94 or $ 4269
A.$4269
2.How would the answer to 1 change if you invested the $300 at the beginning of the month instead of the end.
Money would you have at the end of the 14 months = fv(rate,nper,pmt,pv,1)
Money would you have at the end of the 14 months = fv(3%/12,14,300,0,1)
Money would you have at the end of the 14 months = $ 4279.61 or $ 4280
C.$4280
3.You have $700 in your saving account and would like to add to it $100 a month for the next 5-years. If you can earn 4%, what would be the balance of your savings account at the end of the 5 years?
The balance of your savings account at the end of the 5 years = fv(rate,nper,pmt,pv)
The balance of your savings account at the end of the 5 years = fv(4%/12,5*12,100,700)
The balance of your savings account at the end of the 5 years = 7484.60 or $ 7485
B.$7485
4.You purchased a home for $250,000 and borrowed 80% of the value for 30 years at 4.5%.
Calculate your monthly payment
Your monthly payment = pmt(rate,nper,pv,fv)
Your monthly payment = pmt(4.50%/12,30*12,-250000*80%,0)
Your monthly payment = 1013.37 or $ 1013
A.$1013
5.Your gross annual salary is $46,000. Your mortgage monthly payment cannot exceed 28% of your gross monthly income. You are applying for a conventional 30-year mortgage at a 4.8%. Calculate your maximum monthly payment
Maximum monthly payment = 46000*1/12*28%
Maximum monthly payment = 1073
A.$1073
6.You are eligible for $1026 monthly payment on a 30 year 4.5% fixed rate mortgage. You are interested in a condo whose property taxes are $300 a month and homeowners insurance are $60 a month.
a.How much money can you borrow and what is your monthly payment ?
Monthly Payment = 1026-300-60 = 666
Money you can borrow = pv(rate,nper,pmt,fv)
Money you can borrow = pv(4.50%/12,30*12,666,0)
Money you can borrow = 131,442
C.$131,442, $666
b.What is the interest and principle portions of your first payment
Interest portions of your first payment = 131442*4.50%/12 = 493
Principle portions of your first payment = 666-493 = 173
C.$493, $173
c.What is the principle balance of your mortgage after 15 years (180 payments)?
Principle balance of your mortgage after 15 years = pv(rate,nper,pmt,fv)
Principle balance of your mortgage after 15 years = pv(4.50%/12,180,666,0)
Principle balance of your mortgage after 15 years = 87,059
A.$87,059
d.How much interest have you paid over the past 15 years (180 payments)?
Total Amount Paid = 666*180 = 119880
Total Principal reduced = 131442 - 87059 = 44383
Total Interest paid = 119880 - 44383 = 75497
D.$75,497
e.If you increased your monthly payments by $50, how long would it take you to payoff your mortgage?
No of month to pay the loan = nper(rate,pmt,pv,fv)
No of month to pay the loan = nper(4.50%/12,716,-131442,0)
No of month to pay the loan = 312 Month
No of Year = 312/12 = 26 Years
A.About 26 years
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