Question

8&9

12 points TanFin12 52027 8. My Notes O Ask Your Teacher The Johnsons have accumulated a nest egg of $40,000 that they intend to use as a down payment toward the purchase of a new house. Because their present gross income has placed them in a relatively high tax bracket, they have decided to invest a minimum of $2300/month in monthly payments (to take advantage of the tax deduction) toward the purchase of their house. However, because of other financial obligations, their monthly payments should not exced $2900. If local mortgage rates are 2.5 % / year compounded monthly for a conventional 30-year mortgage, what is the price range of houses that they should consider? (Round your answers to the nearest cent.) least expensive most expensive Ask Your Teacher 1 Previous Amwers TanFin12 5.2.030 My Notes O 01 points O Lauren plans to deposit $7000 into a bank account at the beginning of next month and $150/month into the same account at the end of that month and at the end of each subsequent month for the next 3 years. If her bank pays interest at a rate of 3%/year compounded monthly, how much will Lauren have in her account at the end of 3 years? (Assume she makes no withdrawals during the 3-year period. Round your answer to the nearest cent.) $ Enter a number Submit Answer

Answer 1

Given,

Down payment = $ 40000

Solution :-

Least expensive house - monthly Payment (A)= $2300 Mortgage rate - 2.5%/year monthly mostgage rate – 2.5% - 0.208333% or 0.00208333 months in mortgage - 30x12 = 360 months Now, Present Value 2300 202083 L'- 1170.0208333 0.00208333

2300 0.00 208333 L 2.1153465148 2300 0.00208333 X 108333 1.1153465148 2.1153465148 = $587100:67 So, Payment Least expensive - Present value - $582 100.62 = $ 623100.62 + Down + $40000 Most Expensive house & Monthly Payment (A) = $2900 Monthly rate (8) = 0.00208333 months in mortgage (n)=360

Present value 2900 0.00208333 201153465148 0.002083332 lol153 46s1u8 .1183465148 - $733952.96 most expensive = present Value & bown payment = $733952.96 t $ 40000 = $773952.96