1. My wife wants us to purchase a rental house at the beach in Delaware, where...

 

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1. My wife wants us to purchase a rental house at the beach in Delaware, where we like to go periodically. We would need to borrow approximately $200,000.00 to make the deal. We can get a loan from a local Credit Union. It would be a $200,000 loan, but we must pay a $2500 not refundable processing fee, and we must purchase stock in the amount of $1000.00 which earns nothing (but we get it back at the end of the loan period) In addition, we would also incur a $1,000 not refundable appraisal fee (all of these would be withheld from the loan proceeds). The annual interest rate offered would be 4.6%, and we would make MONTHLY payments for 15 years until the loan is paid off. a. Calculate the Monthly payment on the $200,000 loan at 4.6% annual interest ROOT PRO 413 (1-(1+212) b. What would be the period 0 cash flow (loan proceeds- the stock purchase-the $5200000-1000, 2500 - 1000 = $115500 processing fee - the appraisal fee). If the house costs $235,000.00, how much would we have to come up with for the total out of pocket down payment? 4-68 If the house costs $235,000.00, how much would we have to come up with for the total out of pocket down payment? c. What would be the final period cash flow (the final payment + the stock back). 11 p d. Set the problem up in a spreadsheet and calculate the IRR of the cash flow stream. (be sure to convert it back to an annual rate and go to 4 places past the decimal) 1. My wife wants us to purchase a rental house at the beach in Delaware, where we like to go periodically. We would need to borrow approximately $200,000.00 to make the deal. We can get a loan from a local Credit Union. It would be a $200,000 loan, but we must pay a $2500 not refundable processing fee, and we must purchase stock in the amount of $1000.00 which earns nothing (but we get it back at the end of the loan period) In addition, we would also incur a $1,000 not refundable appraisal fee (all of these would be withheld from the loan proceeds). The annual interest rate offered would be 4.6%, and we would make MONTHLY payments for 15 years until the loan is paid off. a. Calculate the Monthly payment on the $200,000 loan at 4.6% annual interest ROOT PRO 413 (1-(1+212) b. What would be the period 0 cash flow (loan proceeds- the stock purchase-the $5200000-1000, 2500 - 1000 = $115500 processing fee - the appraisal fee). If the house costs $235,000.00, how much would we have to come up with for the total out of pocket down payment? 4-68 If the house costs $235,000.00, how much would we have to come up with for the total out of pocket down payment? c. What would be the final period cash flow (the final payment + the stock back). 11 p d. Set the problem up in a spreadsheet and calculate the IRR of the cash flow stream. (be sure to convert it back to an annual rate and go to 4 places past the decimal)

Answer rating: 100% (QA)

ANSWER a We may use the PMT function in Excel or Google Sheets to determine the monthly payment on t... View the full answer