Why Choose Us?
0% AI Guarantee
Human-written only.
24/7 Support
Anytime, anywhere.
Plagiarism Free
100% Original.
Expert Tutors
Masters & PhDs.
100% Confidential
Your privacy matters.
On-Time Delivery
Never miss a deadline.
The cost of a home on a particular island is $1,000,000
The cost of a home on a particular island is $1,000,000. The bank requires a 15% down payment and three points at the time of closing. The cost of the home is financed with a 30-year fixed rate at 8%.
a) Find the required down payment
b) Find the amount of the mortgage
c) Find the amount that must be paid for the three points at closing
d) Find the monthly payment
e) Find the total cost of interest over 30 year
Expert Solution
a) Computation of the down payment:-
Down payment = Cost * % of Down payment
= $1,000,000 * 15%
= $150,000
b) Computation of the amount of mortgage:-
Amount of mortgage = Cost - Down payment
= $1,000,000 - $150,000
= $850,000
c) Computation of the amount paid for 3 points closing cost:-
Amount paid for 3 point closing cost = $850,000 * 3%
= $25,500
d) We can calculate the monthly payment by using the following formula in excel:-
=pmt(rate,nper,-pv,fv)
Here,
Pmt = Monthly payment
Rate = 8%/12 = 0.6667% (monthly)
Nper = 30*12 = 360 periods (monthly)
PV = $850,000
FV = $0
Substituting the values in formula:
= pmt(0.6667%,360,-850000,0)
= $6,237.00
e) Computation of the total cost of interest:-
Total cost of interest = Total payments - Amount of mortgage
= ($6,237 * 12 * 30) - $850,000
= $2,245,319.60 - $850,000
= $1,395,319.60
Archived Solution
You have full access to this solution. To save a copy with all formatting and attachments, use the button below.
For ready-to-submit work, please order a fresh solution below.
