Assignment #1 FIN 320: MANAGERIAL FINANCE Paying of! your rst Palace house When Julies and Patty Bakery were \"house hunting\" 5 years ago, the mortgage rates were pretty high, The xed rate on a 30-year mortgage was 4.00% while the 15-year xed rate was at 475% Aer walking in and out through many homes, they nally reached a consensus and decided to buy a $150,000 two-story house in an up and coming suburban neighborhood in the East Area To avoid prepaid mortgage insurance (PM), they had to borrow from family members and come with 20% down payment and the additional required closing costs Since Julie and Patty Bakery had already accumulated signicant credit card debt and were still paying off their colleges loans, they decided to opt for lower 30-year mortgage payments, despite its higher interest rates, Questions: 1. What is Julie and Patty's monthly mortgage payment under a 30-year mortgage? What is the total interest paid over 30-years period? 2. Had the couple opted for the 15-year mortgage, how much higher would their monthly payment be? What are the monthly payment and total interest paid over lS-years period? 3. What can you conclude regarding the 30-year mortgage vs. 15- year mortgage? Compare the monthly payment and total interest paid for 30-year mortgage vs. 15-year mortgage? Instructions: l.Show all necessary calculations in Tables provided in excel spreadsheet. ZtAach all calculations and tables to this project in a separate excel le You need to reformat to make sure you print out the whole table 3.In the word document that provides the write-up of your report, please summarize your numbers in the table along with the explanations of your finding You can also incorporate the following tables in the report. Table 1: 30-Years and 15-Years Mortgage Report Instructions: 1. Prepare a write-up of your report of at least 3 pages or more, 12 points font and double space. The write-up should be a report format, summarizing all your findings 30- Year Mortgage 15- Years Mortgage and support your findings with numbers (using the questions asked as a guideline to form the report format). The report should have three main parts, introduction, body, and conclusion. The introduction should provide a brief introduction what you Home value $150,000 $150,000 will be discussing the project including the purpose of the assignment. In the body, students should summarize their findings in words and support the findings with the Loan Amount $120,000 $120,000 numbers. Insert the table that summarizes your finding where appropriate. Insert graphical representation if necessary where the text is being discussed. Use the tables APR 4.00% 4.75% o present your finding particularly when it involves comparison and numbers. Even Financing Period when the data is presented in that table, the explanations of those numbers are needed. 360 180 In the conclusion, you need provide the main finding of your report, reemphasize your key findings. There is no need to explain the calculation in the report. The Table 2: 30-Years and 15-Years Monthly Mortgage Payments and Total Interest Paid report should not be laid out as an answer to each question. Attached all raw data, calculation, and regression output at the end of project. The assignment report has to be well-written and well-organized and free from grammatical mistakes. Please format all the number to 4 decimals for easy comparison. Please place the $ or % 30- years mortgage 15-years mortgage where it is appropriate. Insert the raw data and long table at the end of the report. Create graphical representation as needed. Home value $150,00 $ 150,000 Loan amount = PV $120,000 $120,000 APR = APR/12= I/Y 4.00% 4.75% Financing Period = N 360 180 CPT PMT Difference in each month payment Total Interest Paid = (monthly payment* number of payment) - loan