Graduating at the end of the Spring semester, congratulations, you are starting at FIN 310 Corporations a
Question:
Graduating at the end of the Spring semester, congratulations, you are starting at FIN 310 Corporations a week after graduation. The offer is competitive. As such, you decided to buy a home. The price of the house is $450,000. Although excited, as a first time home buyer, to have all of your ducks in a row, you decided to perform comparative analyses of your options. The options are a fifteen-year mortgage with a financing rate of 2.529% per annum or a thirty-year mortgage with a 2.892% per annum. Address the following:
a. Assuming an annual payment (one-time per year), what are the total principal, total interest, and total payment over the life of the loan options?
b. Assuming a monthly payment, what are the total principal, total interest paid, and the total payment at the end of year 5?
c. Assuming both options are feasible, which would you prefer? Why would you choose the option you indicated?
d. What are the effective annual rates based on daily, monthly, and yearly compounding? Discuss the similarities and differences in the rates.
University Physics with Modern Physics
ISBN: 978-0321696861
13th edition
Authors: Hugh D. Young, Roger A. Freedman, A. Lewis Ford