A house that was bought 12 years ago for $150000 is now worth 300000. SHOW ALL W

Question

A house that was bought 12 years ago for $150000 is now worth 300000. SHOW ALL WORK. DO IT MANUALLY ON PAPER NOT ON EXCEL.

11 Sept. 2018 Finite Math Take-home Exam on Finance Name 3. (6.4.30) Refinancing a mortgage: A house that was bought 12 years ago for $150,000 is now worth $300,000. Originally the house was purchased by paying 20% down with the rest financed through a 25 year mortgage at 6.5% interest. After making 144 equal monthly payments, the owner is in need of cash, and would like to refinance. The bank is willing to loan 80% of the current value of the house amortized over the 25 years at the same 6.5% interest rate. How much cash will the owner receive after paying the balance of the original loan? Show all work for up to 15 points. Page 5 of 6

Explanation / Answer

First of all we need to find the balance of loan at end of 12 years

Now let us calculate EMI

EMI = Loan amount/PVIFA(r%,n)

=(150000*80%)/PVIFA(6.5%/12 , 25*12)

=120000/PVIFA(0.5417%,300)

PVIFA(0.5417%,300) = [1-(1/(1+r)^n/r]

=[1-(1/(1.005417)^300)/0.005417]

=[1-(1/5.056701)/0.005417

=[1-0.197757/0.005417]

=0.802243/0.005417

=148.0972

=120000/148.1026

=810.25$

Loan Repayment Schedule

Thus Balance after 12 years = 85190.06$

New loan = 300000*80% = 240000$

After repayment of old loan cash available with owner = 240,000-85190.06 = 154809.94$

Towards Month Opening Balance Installment Interest @ 0.5417% Principal Closing Balance 1 120000.00 810.25 650.04 160.21 119839.79 2 119839.79 810.25 649.17 161.08 119678.71 3 119678.71 810.25 648.30 161.95 119516.76 4 119516.76 810.25 647.42 162.83 119353.93 5 119353.93 810.25 646.54 163.71 119190.22 6 119190.22 810.25 645.65 164.60 119025.63 7 119025.63 810.25 644.76 165.49 118860.14 8 118860.14 810.25 643.87 166.38 118693.75 9 118693.75 810.25 642.96 167.29 118526.47 10 118526.47 810.25 642.06 168.19 118358.28 11 118358.28 810.25 641.15 169.10 118189.17 12 118189.17 810.25 640.23 170.02 118019.15 13 118019.15 810.25 639.31 170.94 117848.21 14 117848.21 810.25 638.38 171.87 117676.35 15 117676.35 810.25 637.45 172.80 117503.55 16 117503.55 810.25 636.52 173.73 117329.82 17 117329.82 810.25 635.58 174.67 117155.14 18 117155.14 810.25 634.63 175.62 116979.52 19 116979.52 810.25 633.68 176.57 116802.95 20 116802.95 810.25 632.72 177.53 116625.42 21 116625.42 810.25 631.76 178.49 116446.93 22 116446.93 810.25 630.79 179.46 116267.48 23 116267.48 810.25 629.82 180.43 116087.05 24 116087.05 810.25 628.84 181.41 115905.64 25 115905.64 810.25 627.86 182.39 115723.25 26 115723.25 810.25 626.87 183.38 115539.87 27 115539.87 810.25 625.88 184.37 115355.50 28 115355.50 810.25 624.88 185.37 115170.13 29 115170.13 810.25 623.88 186.37 114983.76 30 114983.76 810.25 622.87 187.38 114796.38 31 114796.38 810.25 621.85 188.40 114607.98 32 114607.98 810.25 620.83 189.42 114418.56 33 114418.56 810.25 619.81 190.44 114228.12 34 114228.12 810.25 618.77 191.48 114036.64 35 114036.64 810.25 617.74 192.51 113844.13 36 113844.13 810.25 616.69 193.56 113650.57 37 113650.57 810.25 615.65 194.60 113455.96 38 113455.96 810.25 614.59 195.66 113260.31 39 113260.31 810.25 613.53 196.72 113063.59 40 113063.59 810.25 612.47 197.78 112865.80 41 112865.80 810.25 611.39 198.86 112666.95 42 112666.95 810.25 610.32 199.93 112467.01 43 112467.01 810.25 609.23 201.02 112266.00 44 112266.00 810.25 608.14 202.11 112063.89 45 112063.89 810.25 607.05 203.20 111860.69 46 111860.69 810.25 605.95 204.30 111656.39 47 111656.39 810.25 604.84 205.41 111450.98 48 111450.98 810.25 603.73 206.52 111244.46 49 111244.46 810.25 602.61 207.64 111036.83 50 111036.83 810.25 601.49 208.76 110828.06 51 110828.06 810.25 600.36 209.89 110618.17 52 110618.17 810.25 599.22 211.03 110407.14 53 110407.14 810.25 598.08 212.17 110194.96 54 110194.96 810.25 596.93 213.32 109981.64 55 109981.64 810.25 595.77 214.48 109767.16 56 109767.16 810.25 594.61 215.64 109551.52 57 109551.52 810.25 593.44 216.81 109334.71 58 109334.71 810.25 592.27 217.98 109116.72 59 109116.72 810.25 591.09 219.16 108897.56 60 108897.56 810.25 589.90 220.35 108677.21 61 108677.21 810.25 588.70 221.55 108455.66 62 108455.66 810.25 587.50 222.75 108232.92 63 108232.92 810.25 586.30 223.95 108008.96 64 108008.96 810.25 585.08 225.17 107783.80 65 107783.80 810.25 583.86 226.39 107557.41 66 107557.41 810.25 582.64 227.61 107329.80 67 107329.80 810.25 581.41 228.84 107100.96 68 107100.96 810.25 580.17 230.08 106870.87 69 106870.87 810.25 578.92 231.33 106639.54 70 106639.54 810.25 577.67 232.58 106406.96 71 106406.96 810.25 576.41 233.84 106173.12 72 106173.12 810.25 575.14 235.11 105938.00 73 105938.00 810.25 573.87 236.38 105701.62 74 105701.62 810.25 572.59 237.66 105463.96 75 105463.96 810.25 571.30 238.95 105225.00 76 105225.00 810.25 570.00 240.25 104984.76 77 104984.76 810.25 568.70 241.55 104743.21 78 104743.21 810.25 567.39 242.86 104500.36 79 104500.36 810.25 566.08 244.17 104256.18 80 104256.18 810.25 564.76 245.49 104010.69 81 104010.69 810.25 563.43 246.82 103763.87 82 103763.87 810.25 562.09 248.16 103515.70 83 103515.70 810.25 560.74 249.51 103266.20 84 103266.20 810.25 559.39 250.86 103015.34 85 103015.34 810.25 558.03 252.22 102763.13 86 102763.13 810.25 556.67 253.58 102509.54 87 102509.54 810.25 555.29 254.96 102254.59 88 102254.59 810.25 553.91 256.34 101998.25 89 101998.25 810.25 552.52 257.73 101740.53 90 101740.53 810.25 551.13 259.12 101481.40 91 101481.40 810.25 549.72 260.53 101220.88 92 101220.88 810.25 548.31 261.94 100958.94 93 100958.94 810.25 546.89 263.36 100695.59 94 100695.59 810.25 545.47 264.78 100430.80 95 100430.80 810.25 544.03 266.22 100164.59 96 100164.59 810.25 542.59 267.66 99896.93 97 99896.93 810.25 541.14 269.11 99627.82 98 99627.82 810.25 539.68 270.57 99357.26 99 99357.26 810.25 538.22 272.03 99085.22 100 99085.22 810.25 536.74 273.51 98811.72 101 98811.72 810.25 535.26 274.99 98536.73 102 98536.73 810.25 533.77 276.48 98260.25 103 98260.25 810.25 532.28 277.97 97982.28 104 97982.28 810.25 530.77 279.48 97702.80 105 97702.80 810.25 529.26 280.99 97421.81 106 97421.81 810.25 527.73 282.52 97139.29 107 97139.29 810.25 526.20 284.05 96855.24 108 96855.24 810.25 524.66 285.59 96569.66 109 96569.66 810.25 523.12 287.13 96282.53 110 96282.53 810.25 521.56 288.69 95993.84 111 95993.84 810.25 520.00 290.25 95703.59 112 95703.59 810.25 518.43 291.82 95411.76 113 95411.76 810.25 516.85 293.40 95118.36 114 95118.36 810.25 515.26 294.99 94823.37 115 94823.37 810.25 513.66 296.59 94526.77 116 94526.77 810.25 512.05 298.20 94228.58 117 94228.58 810.25 510.44 299.81 93928.76 118 93928.76 810.25 508.81 301.44 93627.32 119 93627.32 810.25 507.18 303.07 93324.25 120 93324.25 810.25 505.54 304.71 93019.54 121 93019.54 810.25 503.89 306.36 92713.18 122 92713.18 810.25 502.23 308.02 92405.15 123 92405.15 810.25 500.56 309.69 92095.46 124 92095.46 810.25 498.88 311.37 91784.09 125 91784.09 810.25 497.19 313.06 91471.04 126 91471.04 810.25 495.50 314.75 91156.29 127 91156.29 810.25 493.79 316.46 90839.83 128 90839.83 810.25 492.08 318.17 90521.66 129 90521.66 810.25 490.36 319.89 90201.77 130 90201.77 810.25 488.62 321.63 89880.14 131 89880.14 810.25 486.88 323.37 89556.77 132 89556.77 810.25 485.13 325.12 89231.65 133 89231.65 810.25 483.37 326.88 88904.77 134 88904.77 810.25 481.60 328.65 88576.11 135 88576.11 810.25 479.82 330.43 88245.68 136 88245.68 810.25 478.03 332.22 87913.46 137 87913.46 810.25 476.23 334.02 87579.44 138 87579.44 810.25 474.42 335.83 87243.60 139 87243.60 810.25 472.60 337.65 86905.95 140 86905.95 810.25 470.77 339.48 86566.47 141 86566.47 810.25 468.93 341.32 86225.15 142 86225.15 810.25 467.08 343.17 85881.98 143 85881.98 810.25 465.22 345.03 85536.96 144 85536.96 810.25 463.35 346.90 85190.06

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