Finance Unit 3 Questions
Finance
Unit 3 Assignment
Answer 15 questions
[All Answers must be submitted in the form at the end of this test. No Exception]
1. Based on the following data, would you recommend buying or renting?
|Rental Costs |Buying Costs |
|Annual rent, $7,380 |Annual mortgage payments, $9,800 ($9,575 is interest) |
|Insurance, $145 |Property taxes, $1,780 |
|Security deposit, $650 |Insurance/maintenance, $1,050 |
| |Down payment/closing costs, $4,500 |
| |Growth in equity, $225 |
| |Estimated annual appreciation, $1,700 |
Assume an after-tax savings interest rate of 6 percent and a tax rate of 28 percent.
2. Estimate the affordable monthly mortgage payment, the affordable mortgage amount, and the affordable home purchase price for the following situation (see Exhibit 9-8):
Monthly gross income, $2,950
Down payment to be made, 15 percent of purchase price
Other debt (monthly payment), $160
Monthly estimate for property taxes and insurance, $210, 30-year loan at 8 percent.
3. Based on Exhibit 9-9, what would be the monthly mortgage payments for each of the following situations?
a. A $40,000, 15-year loan at 11.5 percent. b. A $76,000, 30-year loan at 9 percent. c. A $65,000, 20-year loan at 10 percent.
What relationship exists between the length of the loan and the monthly payment? How does the mortgage rate affect the monthly payment?
.
4. Which mortgage would result in higher total payments?
Mortgage A: $985 a month for 30 years, or
Mortgage B: $780 a month
Unit 3 Assignment
Answer 15 questions
[All Answers must be submitted in the form at the end of this test. No Exception]
1. Based on the following data, would you recommend buying or renting?
|Rental Costs |Buying Costs |
|Annual rent, $7,380 |Annual mortgage payments, $9,800 ($9,575 is interest) |
|Insurance, $145 |Property taxes, $1,780 |
|Security deposit, $650 |Insurance/maintenance, $1,050 |
| |Down payment/closing costs, $4,500 |
| |Growth in equity, $225 |
| |Estimated annual appreciation, $1,700 |
Assume an after-tax savings interest rate of 6 percent and a tax rate of 28 percent.
2. Estimate the affordable monthly mortgage payment, the affordable mortgage amount, and the affordable home purchase price for the following situation (see Exhibit 9-8):
Monthly gross income, $2,950
Down payment to be made, 15 percent of purchase price
Other debt (monthly payment), $160
Monthly estimate for property taxes and insurance, $210, 30-year loan at 8 percent.
3. Based on Exhibit 9-9, what would be the monthly mortgage payments for each of the following situations?
a. A $40,000, 15-year loan at 11.5 percent. b. A $76,000, 30-year loan at 9 percent. c. A $65,000, 20-year loan at 10 percent.
What relationship exists between the length of the loan and the monthly payment? How does the mortgage rate affect the monthly payment?
.
4. Which mortgage would result in higher total payments?
Mortgage A: $985 a month for 30 years, or
Mortgage B: $780 a month