Bank A 0 Bank America $ $ $ Part 1 Total Points: 30 Scenario 1 (10 points) Bank Name Closing Costs Home Value Amount Financed Loan Amount (Amount Financed + Closing Costs) APR No of Years No of Periods Effective Rate Monthly Rate Monthly Payment How does the payment you calculated compare to the one given by the bank? Total Interest Amount ($) Principal Outstanding half way throught the loan 390,000.00 292,500.00 292,500.00 4% 30 360 4% 0.33% 1,396.00 $ $ $ 210,216.00 188,788.00 0 Scenario 2 - Cheaper & Higher Interest Rate (5 points) Lower APR Effective Rate Monthly Rate Monthly Payment Total Interest Amount ($) Higher APR Effective Rate Monthly Rate Monthly Payment Total Interest Amount ($) 0 Scenario 3- Additional Payment/month (Spoints) New Payment No of Years to Payoff the Loan Total Interest Amount ($) Savings 0 Scenario 4 - 15 year loan (5 points) No of Periods Effective Rate Monthly Payments Total Interest Amount ($) SCENARIO 2 Based on Scenario 1, what happens to your effective rate, monthly payment and total interest throughout the life of the loan if, a) your rate (APR) drops by 0.7%? and, b) what happens if it increases by 0.7% SCENARIO 3 Based on Scenario 1, what happens if you pay an additional $250 per month? 1. How much is your new payment? 2. How much sooner do you finish paying your loan? (in years & months) 3. How much do you save on interest? SCENARIO 4 How much is your monthly payment if you finance the house for only 15 years? Assume additional Payment = 0. Based on the above, how much is the total interest amount at the end of the 15 years, what is your effective rate? The first sheet of your workbook should be a summary table. (See file attached on Learn). Analyze and conclude... (Use the scenario analysis to help you conclude? what effect does paying more have on the life o the loan, what is the effect on the change of interest rate.... How is it best to manage your loan xw. Bank A 0 Bank America $ $ $ Part 1 Total Points: 30 Scenario 1 (10 points) Bank Name Closing Costs Home Value Amount Financed Loan Amount (Amount Financed + Closing Costs) APR No of Years No of Periods Effective Rate Monthly Rate Monthly Payment How does the payment you calculated compare to the one given by the bank? Total Interest Amount ($) Principal Outstanding half way throught the loan 390,000.00 292,500.00 292,500.00 4% 30 360 4% 0.33% 1,396.00 $ $ $ 210,216.00 188,788.00 0 Scenario 2 - Cheaper & Higher Interest Rate (5 points) Lower APR Effective Rate Monthly Rate Monthly Payment Total Interest Amount ($) Higher APR Effective Rate Monthly Rate Monthly Payment Total Interest Amount ($) 0 Scenario 3- Additional Payment/month (Spoints) New Payment No of Years to Payoff the Loan Total Interest Amount ($) Savings 0 Scenario 4 - 15 year loan (5 points) No of Periods Effective Rate Monthly Payments Total Interest Amount ($) SCENARIO 2 Based on Scenario 1, what happens to your effective rate, monthly payment and total interest throughout the life of the loan if, a) your rate (APR) drops by 0.7%? and, b) what happens if it increases by 0.7% SCENARIO 3 Based on Scenario 1, what happens if you pay an additional $250 per month? 1. How much is your new payment? 2. How much sooner do you finish paying your loan? (in years & months) 3. How much do you save on interest? SCENARIO 4 How much is your monthly payment if you finance the house for only 15 years? Assume additional Payment = 0. Based on the above, how much is the total interest amount at the end of the 15 years, what is your effective rate? The first sheet of your workbook should be a summary table. (See file attached on Learn). Analyze and conclude... (Use the scenario analysis to help you conclude? what effect does paying more have on the life o the loan, what is the effect on the change of interest rate.... How is it best to manage your loan xw
