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Suppose you are buying your first condo for $375,000, and you will make a $55,000 down payment
Suppose you are buying your first condo for $375,000, and you will make a $55,000 down payment. You have arranged to finance the remainder with a 30-year, monthly payment, amortized mortgage at a 9% nominal interest rate, with the first payment due in one month. What will your monthly payments be? $2,268.35 $2.918.20 $3,016.22 $2.574.79
Trevor Smith wants to have $1,000,000 at retirement, which is 20 years away. He already has $250,000 in an IRA account earning 6 percent annually. Starting next year, he plans to invest in a mutual fund the same amount every year until he retires. He expects to earn 9 percent annually with mutual fund investment. What is the minimum amount Trevor will have to invest every year to achieve his savings goal at retirement? 3.874.43 9.900.82 2.857.66 4.100.38
Expert Solution
Hi, As per the chegg guidelines, in case of multiple questions, I need to solve the first question.
Present value = Monthly payment x [ (1 – 1 / (1 + r)n) / r ]
r is computed as follows:
= 9% / 12 (Since the payments are monthly, hence divided by 12)
= 0.75%
n is computed as follows:
= 30 x 12 (Since the payments are monthly, hence multiplied by 12)
= 360
So, the monthly payment will be computed as follows:
$ 375,000 - $ 55,000 = Monthly payment x [ (1 - 1 / (1 + 0.0075)360 ) / 0.0075]
$ 320,000 = Monthly payment x 124.2818657
Monthly payment = $ 320,000 / 124.2818657
Monthly payment = $ 2,574.79
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