Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

HI, I need help on some problems. I worked on some but can not figure out the rest. If you can show the steps it

HI, I need help on some problems. I worked on some but can not figure out the rest. If you can show the steps it would help. thankyou.
image text in transcribed
image text in transcribed
Part II: Selling the House Suppose that after living in the house for 10 years, you decide to sell it. The economy experiences ups and downs, but in general the value of real estate increases over time. Recall the original purchase price you can click back to Question 1 if you need to). Original purchase price (from Question 1) = $ 222300 To approximate the future value of an investment such as real estate, you will use the compounded interest formula: Nk Px = Po(1+5)** This is just an approximation, so we'll use an annual compounding period (so, k = 1). Find the future value of the home 10 years after you purchased it assuming a 4% interest rate. Use the full purchase price of the home from the previous problem (Question 1) as the principal (or initial value, Po) in the compound interest formula. Future value of home = $ This "Future value is the price you will sell the house for after you've owned it for ten years. Now you will answer the question of whether or not you have made or lost money with this investment You will need several pieces of information in order to answer the question. You will need the amount of your down payment (from Question 1), the amount you paid toward the mortgage over ten years your monthly payment from Question 1 times the number of payments), and finally, the amount of principal you still owe on the mortgage. Down payment $ 22230 Down payment = $ 22230 Mortgage paid over 10 years $ To find the principal balance on the mortgage, you will use the Loan Formula: NK + Po = (See your text in the Finance module for help. In this formula,d is the monthly payment and is the annual interest rate expressed as a decimal from Part I, sor=;N is the number of years remaining on the loan, and, of course, k = 12.) Principal balance on mortgage after 10 years = To determine whether or not you've made or lost money, you must compare the expenses" (down payment + mortgage paid + principal balance) to the "return" (future value of the home) Find the total expenses". Expenses = $ After 10 years, did you lose or gain money from selling the house? Answer: gained How much (did you lose or gain)? Answer: Part II: Selling the House Suppose that after living in the house for 10 years, you decide to sell it. The economy experiences ups and downs, but in general the value of real estate increases over time. Recall the original purchase price you can click back to Question 1 if you need to). Original purchase price (from Question 1) = $ 222300 To approximate the future value of an investment such as real estate, you will use the compounded interest formula: Nk Px = Po(1+5)** This is just an approximation, so we'll use an annual compounding period (so, k = 1). Find the future value of the home 10 years after you purchased it assuming a 4% interest rate. Use the full purchase price of the home from the previous problem (Question 1) as the principal (or initial value, Po) in the compound interest formula. Future value of home = $ This "Future value is the price you will sell the house for after you've owned it for ten years. Now you will answer the question of whether or not you have made or lost money with this investment You will need several pieces of information in order to answer the question. You will need the amount of your down payment (from Question 1), the amount you paid toward the mortgage over ten years your monthly payment from Question 1 times the number of payments), and finally, the amount of principal you still owe on the mortgage. Down payment $ 22230 Down payment = $ 22230 Mortgage paid over 10 years $ To find the principal balance on the mortgage, you will use the Loan Formula: NK + Po = (See your text in the Finance module for help. In this formula,d is the monthly payment and is the annual interest rate expressed as a decimal from Part I, sor=;N is the number of years remaining on the loan, and, of course, k = 12.) Principal balance on mortgage after 10 years = To determine whether or not you've made or lost money, you must compare the expenses" (down payment + mortgage paid + principal balance) to the "return" (future value of the home) Find the total expenses". Expenses = $ After 10 years, did you lose or gain money from selling the house? Answer: gained How much (did you lose or gain)

Step by Step Solution

There are 3 Steps involved in it

Step: 1

blur-text-image

Get Instant Access to Expert-Tailored Solutions

See step-by-step solutions with expert insights and AI powered tools for academic success

Step: 2

blur-text-image

Step: 3

blur-text-image

Ace Your Homework with AI

Get the answers you need in no time with our AI-driven, step-by-step assistance

Get Started

Recommended Textbook for

International Corporate Finance

Authors: Mark R. Eaker, Frank J. Fabozzi, Dwight Grant

1st Edition

0030693063, 9780030693069

More Books

Students also viewed these Finance questions

Question

Is conflict always unhealthy? Why or why not? (Objective 4)

Answered: 1 week ago