You are purchasing a house, and your bank is giving you a special mortgage that will require
Question:
You are purchasing a house, and your bank is giving you a special mortgage that will require annual payments for 25 years. The amount borrowed now is $300,000 and the first mortgage payment will be in one year. a. Using C as the payment amount, indicate on a timeline all of the cash flows from your perspective related to this mortgage (outflows should be indicated as negative numbers).b. What will your payments be if the interest rate is 3% per year? c. What will your payments be if the interest rate is 4% per year? d. Comparing your answers in parts (b) and (c), when the interest rate increased by 1%, by what percent did the mortgage payment increase?
Income Tax Fundamentals 2013
ISBN: 9781285586618
31st Edition
Authors: Gerald E. Whittenburg, Martha Altus Buller, Steven L Gill