6. -1 points 0/6 Submissions Used My Notes Lupe made a down payment o $1600 towa

Question

6. -1 points 0/6 Submissions Used My Notes Lupe made a down payment o $1600 toward the purchase of a new car. To pay the balance of the purchase price, she has secured a loan or her bank at the rate of 3%/year compounded monthly Under the terms of her finance agreement she is required to make payments of $250/month for 36 months. What was the cash price of the car? (Round your answer to the nearest cent.) 7" 1 points 0/6 Submissions Used My Notes + Five years ago, Diane secured a bank loan of $370,000 to help finance the purchase of a loft in the San Francisco Bay area. The term of the mortgage was 30 years, and the interest rate was 9% per year compounded monthly on the unpaid balance. Because the interest rate or a conventional 30-year home mortgage has no dropped to % per year com pounded monthly Diane is thinking of refinancing her property. Round your answers to the nearest cent.) (a) What is Diane's current monthly mortgage payment? (b) What is Diane's current outstanding balance? (c) If Diane decides to refinance her property by securing a 30-year home mortgage loan in the amount of the current outstanding principal at the prevailing interest rate of 5% per year compounded monthly, what will be her monthly mortgage payment? Use the rounded outstanding balance (d) How much less would Diane's monthly mortgage payment be if she refinances? Use the rounded values from parts (a)-(c) 8. 1 points 0/6 Submissions Used My Notes + Sarah secured a bank loan of $170,000 for the purchase of a house. The mortgage is to be amortized through monthly payments for a term of 15 years, with an interest rate of 3%/year compounded monthly on the unpaid balance. She plans to sell her house in 5 years. How much will Sarah still owe on her house at that time? (Round your answer to the nearest cent.)

Explanation / Answer

6. The formula to be used is P = L[r(1 + r)n]/[(1 + r)n - 1], where L is the loan amount, r is rate of interest per period, n is the number of periods and P is the periodic payment. Here, P = $250, r = 13/1200 and n = 36 so that 250 = L(13/1200)[(1+13/1200)36]/ [(1+13/1200)36 -1] or, L = 250*(1200/13)*0.473886271)/ (1.473886271) = $ 7419.73 (on rounding off to the nearest cent). Thus, the cash price of the car purchased by Lupe is $1600+ $ 7419.73 = $ 9019.73.

7. (a)The same formula as above will be used. Here, L = $ 370000, n = 30*12=360,and r = 9/1200. Then         P = 370000*(9/1200)*[(1+9/1200)360 -1]/[ (1+9/1200)360] = 2775*(13.73057612/14.73057612)= $ 2586.62 (on rounding off to the nearest cent). Diane’s current monthly mortgage payment is $ 2586.62.

(b)The formula used to calculate the remaining loan balance (B) of a fixed payment loan after p months is B = L[(1 + r)n-(1 +r)p]/[(1 + r)n-1]. Here, p= 5*12= 60 so that B =370000*[[(1+9/1200)360 -(1+9/1200)60 ]/ [(1+9/1200)360 -1] = 370000(14.73057612-1.565681027)/ 13.73057612) = $ 354756.50. Thus, Diane’s current outstanding balance is $ 354756.50, say $354757 (on rounding off to the nearest dollar) .

(c ). If Diane refinances for 30 years at 5 %, then P=370000*(5/1200)*[(1+5/1200)360 -1]/[ (1+5/1200)360] = 354757*(5/1200)*(3.467744319/4.467744319)= $ 1147.30. Thus, Diane’s monthly repayment ,now, would be $ 1147.30.

Please post Q 8 separately again.

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