Question

Total Lun 1 El year -52wal Best option is set sell to the broker became the house is $360,916 - Broker offered $400,000 6. 29 total points. You have decided that you will start a savings plan. You will deposit $20 per week into n. You will deposit $20 per week into an account that you think will pay 8% per year. A 10 points. How much will you have in 15 years? 15 years = 15 X 4 FV = 2001 +0.08) 780 = 15,600 $14,444.44 B. 12 points. Suppose that, with your savings, you will buy a house after 15 years. In addition to your down payment, you will borrow $400,000. If the interest rate is 3.6% on your 30-year mortgage. What will be your monthly payment? 30 year = 360morths. 7 14,4194 T (1 + 0.36) 300 - AFV = 400000 1 O 0.936 C. 2 points. Suppose that the down payment is equal to what you will have in your saving account. How much does your home cost? D. 5 points. How much total interest will you have paid once your mortgage is paid off?

Answer 1

$ Solution A. Weekly payments Numbers of weeks in year(a) No of years (6) Total time in weeks (axb) 20.00 52 weeks 15 years 780 weeks Rate of Interest 8% / 52 0.154% |Future Value = Weekly payments x ((1+rate) time - 1)/rate $20 x ((1.0015385)^780 -1)/0.0015385 $20 x ((3.31756 - 1)/0.0015385 $ 30,182.07 $ Solution B. Amount to be borrowed Rate of Interest Monthly rate of Int (3.6%/12) Tenure of Mortgage Tenure in months (30 x 12) 4,00,000 3.60% 0.30% 30 years 360 months Monthly payment = Amount borrowed x rate x (1 + rate )"time (1+rate)^time - 1 $400000 x 0.003 x (1.003)^360 (1.003)^360 - 1 $400000 x 0.003 x 2.9399 2.9399-1 = $ 3,527.88 1.9399 Monthly Payment = $ 1,818.59 Solution C. Calulation of Cost of Home Amount of Borrowings Add: Amount in savings a/c Cost of home $4,00,000.00 $ 30,182.07 $4,30,182.07 Solution D. Calculation of Amount of Interest on Mortgage Total Payments ($1818.59 x 360) $6,54,692.40 less: Amount of Borrowings $4,00,000.00 Amount of Interest $ 2,54,692.40

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