Eric just bought a house yesterday in Thunder Bay. The house was listed for $585,000 and...
Fantastic news! We've Found the answer you've been seeking!
Question:
Transcribed Image Text:
Eric just bought a house yesterday in Thunder Bay. The house was listed for $585,000 and Eric made a down payment of $150,000 and took out a 25-year mortgage to finance the purchase. The quoted interest rate is 5% and the first mortgage payment is in one month. a) How much is the monthly payment of the mortgage? b) How much is the total interest cost if Eric follows the monthly payment schedule to the end of the mortgage term? c) What is the balance of this mortgage after 5 years? d) Today, following a friend's advice, Eric decides to switch to weekly payments. How much is the weekly payment? Compared with your answer in (b), how much interest can Eric save? e) Instead of making weekly payment, suppose Eric decides to prepay $5,000 at the end of the first year. How much interest will he save by making the prepayment? f) How much is the monthly payment if it is a US mortgage with the same principal amount, quoted rate and mortgage term? Please note that the quoted rate of a US mortgage compounds monthly. Eric just bought a house yesterday in Thunder Bay. The house was listed for $585,000 and Eric made a down payment of $150,000 and took out a 25-year mortgage to finance the purchase. The quoted interest rate is 5% and the first mortgage payment is in one month. a) How much is the monthly payment of the mortgage? b) How much is the total interest cost if Eric follows the monthly payment schedule to the end of the mortgage term? c) What is the balance of this mortgage after 5 years? d) Today, following a friend's advice, Eric decides to switch to weekly payments. How much is the weekly payment? Compared with your answer in (b), how much interest can Eric save? e) Instead of making weekly payment, suppose Eric decides to prepay $5,000 at the end of the first year. How much interest will he save by making the prepayment? f) How much is the monthly payment if it is a US mortgage with the same principal amount, quoted rate and mortgage term? Please note that the quoted rate of a US mortgage compounds monthly.
Expert Answer:
Answer rating: 100% (QA)
a To calculate the monthly payment of the mortgage we can use the formula for a fixedrate mortgage p... View the full answer
Related Book For
South-Western Federal Taxation 2020 Comprehensive
ISBN: 9780357109144
43rd Edition
Authors: David M. Maloney, William A. Raabe, James C. Young, Annette Nellen, William H. Hoffman
Posted Date:
Students also viewed these finance questions
-
Managing Scope Changes Case Study Scope changes on a project can occur regardless of how well the project is planned or executed. Scope changes can be the result of something that was omitted during...
-
The Crazy Eddie fraud may appear smaller and gentler than the massive billion-dollar frauds exposed in recent times, such as Bernie Madoffs Ponzi scheme, frauds in the subprime mortgage market, the...
-
Planning is one of the most important management functions in any business. A front office managers first step in planning should involve determine the departments goals. Planning also includes...
-
Jilmar Company acquired a delivery truck and made payment of P2,870,000 analyzed as follows: Price of truck - P2,500,000 Charge for extra equipment - P150,000 Value added tax (recoverable) -...
-
A cylinder fitted with a piston contains 2 kg of R-12 at 10C, 90% quality. The system undergoes a quasi-equilibrium polytropic expansion to 100 kPa, during which the system receives a heat...
-
Saffordville Company lost 70% of its inventory in a fire on March 25, 2008. The accounting records showed the following gross profit data for February and March. Saffordville Company is fully insured...
-
Concrete expands both horizontally and vertically over time. Measurements of horizontal and vertical expansion (in units of parts per hundred thousand) were made at several locations on a bridge in...
-
Selected transactions from the journal of Palm Tree Travel, Inc., are presented below. (a) Post the transactions to T accounts. (b) Prepare a trial balance at August 31,2008. Datc Account Titles and...
-
very disturbing Jimmy Savile shocking reports of abuse Please read and/or watch the video; Torjesen, I. (2014). Savile's 50-year reign of abuse spanned 28 NHS hospitals; investigation finds. BMJ:...
-
Mike Cichanowski founded Wenonah Canoe and later purchased Current Designs, a company that designs and manufactures kayaks. The kayak-manufacturing facility is located just a few minutes from the...
-
R7-3. Block A in Figure RP7-3 has a mass of 4 kg and is on the verge of tipping as it begins to slide due to force P. Determine the coefficient of static friction between the block and the hori-...
-
Factoring a small number, such as 36, may be pretty simple, but how might one go about factoring a larger number, such as 19,800?
-
a. Equipment with a book value of $65,300 and an original cost of $133,000 was sold at a loss of $14,000. b. Paid $89,000 cash for a new truck. c. Sold land costing $154,000 for $198,000 cash,...
-
Lamda corporation wants to acquire another company within its industry for $100m and it expects the acquisition to contribute to its free cash flow by $5m the first year, and this contribution is...
-
Discuss the concept of value proposition, positioning strategy, customer satisfaction and retention and their relationship to organizational and marketing success. Explain Briefly?
-
Wao you just won the $20 million lottery. The lottery official have offered you $1 million dollars at the end of each year for the next 20 years. OR a one time payment of $11 million today. Assuming...
-
The table and graph below display data from the Fresh 4 Less farm stand in Austin, Texas. The number of customers and total sales in dollars for several months are displayed. Data downloaded on...
-
Phosgene, COCl2, is a toxic gas used in the manufacture of urethane plastics. The gas dissociates at high temperature. At 400oC, the equilibrium constant Kc is 8.05 104. Find the percentage of...
-
Al is a medical doctor who conducts his practice as a sole proprietor. During 2019, he received cash of $280,000 for medical services. Of the amount collected, $40,000 was for services provided in...
-
Christie is the preparer of the Form 1120 for Yostern Corporation. On the return, Yostern claimed a deduction that the IRS later disallowed on audit. Compute the tax preparer penalty that could be...
-
Red Corporation wants to set up a manufacturing facility in a midwestern state. After considerable negotiations with a small town in Ohio, Red accepts the following offer: land (fair market value of...
-
Fill in the Blank. The Duhamel integral can be used to find the response of ___________ single-degree-of-freedom systems under arbitrary excitations.
-
Sandblasting is a process in which an abrasive material, entrained in a jet, is directed onto the surface of a casting to clean its surface. In a particular setup for sandblasting, the casting of...
-
\(f(t)=\delta(t-\tau)\) corresponds to a force applied at a. \(t-\tau=0\) b. \(t-\tau <0\) c. \(t-\tau>0\)
Study smarter with the SolutionInn App