1 In 2000, Sam bought a beautiful timeshare in Puerto Rico for $20,000. By 2015, Sam...
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1 In 2000, Sam bought a beautiful timeshare in Puerto Rico for $20,000. By 2015, Sam was desperately trying to sell this same timeshare for a mere $1. Although the timeshare was very well kept and located in a trendy neighborhood. Sam could not find a buyer. What is the likely reason why Sam is having such a difficult time finding a buyer for this timeshare? 2 Suzi plans to make a down payment of $300,000 for a house that is worth $2,000,000. Unfortunately for Suzi, the only mortgage lender willing to give her a loan requires her to pay a rate of 12% APR. Note that competitive rates in the market are about 6% APR. (a) Why is Suzi unable to find a lender willing to give her a loan with a competitive rate? (b) Suzi decides to take the loan with the 12% APR, where she will make a down payment of $300,000. If the value of Suzi's house is expected to increase by 4% over the next year, by how much will Suzi's equity in this house increase during this same year? 3 A homebuyer takes-out a partially amortizing loan in the amount of $1,000,000 for a term of 20 years at 6% APR, compounded monthly. A balance of $200,000 will remain and be paid as a lump sum when the term expires. Assume that there are no pre-payment penalties. (a) What are the monthly mortgage payments the homebuyer must make to the lender? (b) What is the outstanding balance of the loan at the end of 5 years? (c) At the end of year 5, the market rate of interest is 12%. What is the market value of the loan at the end of 5 years? (d) If the loan is sold at market value at the end of year 5, is this loan sold at a discount? 1 In 2000, Sam bought a beautiful timeshare in Puerto Rico for $20,000. By 2015, Sam was desperately trying to sell this same timeshare for a mere $1. Although the timeshare was very well kept and located in a trendy neighborhood, Sam could not find a buyer. What is the likely reason why Sam is having such a difficult time finding a buyer for this timeshare? 2 Suzi plans to make a down payment of $300,000 for a house that is worth $2,000,000. Unfortunately for Suzi, the only mortgage lender willing to give her a loan requires her to pay a rate of 12% APR. Note that competitive rates in the market are about 6% APR. (a) Why is Suzi unable to find a lender willing to give her a loan with a competitive rate? (b) Suzi decides to take the loan with the 12% APR, where she will make a down payment of $300,000. If the value of Suzi's house is expected to increase by 4% over the next year, by how much will Suzi's equity in this house increase during this same year? 3 A homebuyer takes-out a partially amortizing loan in the amount of $1,000,000 for a term of 20 years at 6% APR, compounded monthly. A balance of $200,000 will remain and be paid as a lump sum when the term expires. Assume that there are no pre-payment penalties. (a) What are the monthly mortgage payments the homebuyer must make to the lender? (b) What is the outstanding balance of the loan at the end of 5 years? (c) At the end of year 5, the market rate of interest is 12%. What is the market value of the loan at the end of 5 years? (d) If the loan is sold at market value at the end of year 5, is this loan sold at a discount? 1 In 2000, Sam bought a beautiful timeshare in Puerto Rico for $20,000. By 2015, Sam was desperately trying to sell this same timeshare for a mere $1. Although the timeshare was very well kept and located in a trendy neighborhood. Sam could not find a buyer. What is the likely reason why Sam is having such a difficult time finding a buyer for this timeshare? 2 Suzi plans to make a down payment of $300,000 for a house that is worth $2,000,000. Unfortunately for Suzi, the only mortgage lender willing to give her a loan requires her to pay a rate of 12% APR. Note that competitive rates in the market are about 6% APR. (a) Why is Suzi unable to find a lender willing to give her a loan with a competitive rate? (b) Suzi decides to take the loan with the 12% APR, where she will make a down payment of $300,000. If the value of Suzi's house is expected to increase by 4% over the next year, by how much will Suzi's equity in this house increase during this same year? 3 A homebuyer takes-out a partially amortizing loan in the amount of $1,000,000 for a term of 20 years at 6% APR, compounded monthly. A balance of $200,000 will remain and be paid as a lump sum when the term expires. Assume that there are no pre-payment penalties. (a) What are the monthly mortgage payments the homebuyer must make to the lender? (b) What is the outstanding balance of the loan at the end of 5 years? (c) At the end of year 5, the market rate of interest is 12%. What is the market value of the loan at the end of 5 years? (d) If the loan is sold at market value at the end of year 5, is this loan sold at a discount? 1 In 2000, Sam bought a beautiful timeshare in Puerto Rico for $20,000. By 2015, Sam was desperately trying to sell this same timeshare for a mere $1. Although the timeshare was very well kept and located in a trendy neighborhood, Sam could not find a buyer. What is the likely reason why Sam is having such a difficult time finding a buyer for this timeshare? 2 Suzi plans to make a down payment of $300,000 for a house that is worth $2,000,000. Unfortunately for Suzi, the only mortgage lender willing to give her a loan requires her to pay a rate of 12% APR. Note that competitive rates in the market are about 6% APR. (a) Why is Suzi unable to find a lender willing to give her a loan with a competitive rate? (b) Suzi decides to take the loan with the 12% APR, where she will make a down payment of $300,000. If the value of Suzi's house is expected to increase by 4% over the next year, by how much will Suzi's equity in this house increase during this same year? 3 A homebuyer takes-out a partially amortizing loan in the amount of $1,000,000 for a term of 20 years at 6% APR, compounded monthly. A balance of $200,000 will remain and be paid as a lump sum when the term expires. Assume that there are no pre-payment penalties. (a) What are the monthly mortgage payments the homebuyer must make to the lender? (b) What is the outstanding balance of the loan at the end of 5 years? (c) At the end of year 5, the market rate of interest is 12%. What is the market value of the loan at the end of 5 years? (d) If the loan is sold at market value at the end of year 5, is this loan sold at a discount?
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SOLUTION 1 The likely reason why Sam is having such a difficult time finding a buyer for the timeshare is that the demand for timeshares in Puerto Rico has significantly decreased or the market for ti... View the full answer
Related Book For
Smith and Roberson Business Law
ISBN: 978-0538473637
15th Edition
Authors: Richard A. Mann, Barry S. Roberts
Posted Date:
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