Question

19) 19, A Xerox DocuColor photocopier costing $45,000 is paid off in 60 monthly installments at 7.40% APR. After three years the company wishes to sell the photocopier. What is the minimum price for which they can sell the copier so that they can cover the cost of the balance remaining on the loan? A) $16,009 B) $28,015 C) $20,011 D) $24,013 20) 20 An investor buys a property for $699,000 with a 25-year mortgage and monthly payments at 7.90% APR. After 18 months the investor resells the property for $766,947. How much cash will the investor have from the sale, once the mortgage is paid oft? A) S164,346 B) S115,042 C) $65,738 D) $82,173

Answer 1

Answer to Question 19 Cost of Photocopier Monthly interest rate (7.44%/12) Term PVA (0.62%, 60 months) 45,000 0.62% 60 months 49.97639 900 Monthly Installment amount (45000/49.97639) PVA (0.62%, 36 months) 32.17641 28,973 PV of loan after 36 months (900.43*32.17641) PV of balance loan amount (45000-28973) 16,027 PVI (0.62%, 36 months) FV of balance loan amount (16027/0.80051) 0.80051 20,021 $ Hence, the minimum price to recover balance loan amount shall be Option (c) $ 20,011.

Answer to Question 20 $ Cost of Property Monthly interest rate (7.90%/12) Term (25*12) PVA (0.66%, 300 months) 6,99,000 0.66% 300 months 130.68420 5,349 Monthly Installment amount (699000/130.68420) PVA (0.66%, 18 months) 16.92200 $ 90,512 PV of loan after 18 months (5349*16.922) PV of balance loan amount (699000-608488) $ 6,08,488 $ 0.88860 6,84,772 PVI (0.66%, 18 months) FV of balance loan amount (608488/0.8886) Cash Received Excess cash received (766947-684772) $ $ 7,66,947 82,175 Hence, the cash that the investor would have after the mortgage is paid off is Option (d) $ 82,173