Question

1. How much will be your payment if you were planning to buy a house for $175,000 with 10% down if a bank was willing to give you a 30-year loan at 4.5% interest per year compounded monthly? Payments are to be made at the end of each month.

   		$589
   		$645
   		$798
   		$867

16.67 points   

QUESTION 2

1. Say you bought a house for $195,000 with 10% down, and financed it from a bank for a 30-year term at 5.00% interest per year compounded monthly. If you can make a monthly payment of $750 only, what balloon amount should the bank be ready to have at the end of the 30-year period?

   		$129,467
   		$136,987
   		$148,987
   		$159,895

16.67 points   

QUESTION 3

1. How much will you owe at the end of the first year, if you bought a house for $175,000 with 10% down, financed from a bank that is willing to give you a 30-year loan at 4.5% interest per year compounded monthly, and you made an extra payment of $100 at the end of each month along with the regular payment?

   		$165,897
   		$158,897
   		$153,734
   		$151,654

16.67 points   

QUESTION 4

1. Say you bought a house for $295,000 with 10% down, and financed it from a bank for a 30-year term at 4.25% interest per year compounded monthly. If the bank is ready to allow you a ballon payment of $100,000 at the end of the 30-year term, what will be the payment?

   		$1,168
   		$1,306
   		$1,444
   		$1,563

16.67 points   

QUESTION 5

1. Say you bought a house for $325,000 with 20% down, and financed it from a bank for a 15-year term at 3.25% interest per year compounded monthly. If you paid an extra $900 every year (end of 12th month) along with the regular month-end payments, which will be true from the following?

   		You will be able to cut off 72 payments from the loan.
   		You will have to make 170 payments of $1,826.94
   		You will have to make 171 monthly payments of $1,826.94, $900 yearly payments for 14 years, and make a 172nd payment at the end of the 172nd month of $402.37.
   		None of the above are true.

16.67 points   

QUESTION 6

1. Say you bought a house for $275,000 with 10% down, and financed it from a bank for a 30-year term at 4.75% interest per year compounded monthly. If you paid an extra $1,000 every year (end of 12th month) along with the regular month-end payments, which will be true from the following?

   		You will be able to cut off 42 full payments and a partial payment from the loan.
   		You will have to make only 315 payments.
   		You will have to make 316 payments of $1,291.08 each, pay $1,000 at the end of the first 26 years, & make a 317th payment of $1,194.97.
   		You will have to make 316 paymnents of $1,291.08 each & make a 317th payment of $1,190.26.

Answer 1

1)

Monthly payment [Pxrx(1+r)^n]:[(1+r)^n-1] Here, 4.50% 30 1 Interest rate per annum 2 Number of years 3 Number of compoundings per per annum 1:3 Interest rate per period (r) 2x3 Number of periods (n) Loan amount (P) 12 0.375% 360 157,500 =175000*(1-10%) Monthly payment 798 (157500X0.375%*(1+0.375%)^360=((1+0.375%) 360-1)

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