You are planning to purchase a house that costs $480,000. You plan to put 20% do
ID: 2802042 • Letter: Y
Question
You are planning to purchase a house that costs $480,000. You plan to put 20% down and borrow the remainder. Based on your credit score, you believe that you will pay 3.99% on a 30-year mortgage. Use function “PMT" to calculate your mortgage payment. the most that you can borrow? of $400,000. off. (There is not a function for this, enter the formula into the cell.) I. 2. Use function "PV" to calculate the loan amount given a payment of $1500 per month. What is 3. Use function "RATE" to calculate the interest rate given a payment of S1500 and a loan amount 4. For each scenario, calculate the total interest that you will have paid once the mortgage is paid 5. For each scenario, calculate the total cost of the home purchase. (Down payment plus principle (loan amount) plus interest.) Assume that you plan to pay an extra $300 per month on top of your mortgage payment, calculate how long it will take you to pay off the loan given the higher payment. (Use interest rate of 3.99 %). Calculate how much interest you will pay in total? Compare this to the value that you calculated for #2. 6.Explanation / Answer
Cost Of the House $480,000.00 Down Payment 20.00% Loan = $480,000 x (1 - 20%) $384,000.00 Rate = 3.99%/12 0.33% Nper = 30 x 12 360 a) Monthly Mortgage Payment PMT(.33%,360,-$384,000) $1,831.06 b) Rate = 3.99%/12 0.33% Nper = 30 x 12 360 PMT 1500 Present Value PV(.33%,360,-1500) $314,571.61 c) Nper = 30 x 12 360 PMT 1500 PV $400,000.00 Rate = (360,1500,-400000) 0.18% Annual rate = 0.18% x 12 2.11% d) Scenario 1 Scenario 2 Scenario 3 Rate 0.33% 0.33% 0.18% Nper 360 360 360 PMT $1,831.06 1500 1500 Total Payment $659,182.18 $540,000.00 $540,000.00 Less: PV -$384,000.00 -$314,571.61 -$400,000.00 Total Interest $275,182.18 $225,428.39 $140,000.00
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