In the dark about STUDENT DEBT they 59 Du 74 53 De 52 M A 30 year Fixed Rate Mortgage is one of the most well known annuities based loans. The home buyer will make the same financial payment each month over 360 months (30 years) Time Value of Money Financial Calculator en At the start of the payments, the Amount of Interest paid is HIGH and the amount of Principal is LOW. As each monthly payment progresses, the Amount of Interest paid FALLS and the amount of Principal paid RISES. * Technical Point -There are two basic types of annuities: ordinary annuities (paid at end of the period) and annuities due (paid at the start of the period). An annuity due is seen more in financial investments. The Time Value of Money Calculator automatically produces the payment as an Annuity. The payment stay constant over the period of the Joan (or investment) The is a $500,000 Mortgage Loan @ 6% over 30 years (360 months). The monthly payment is $2997.75. Notice that the payment is negative, meaning that it is CASH OUT for the individual paying the loan. Open the following page in another window and open the Annuities Spreadsheet and make a copy for yourself. 2.3 Advanced Explanations. Annuities-Loans and Mortgages Question 1 4 pts As you are evaluating the purchase, you need to review the monthly payment and total interest that will be paid over the life of the loan. The Amortization Spreadsheet is set to convert years into months. Input values exactly as they are seen in the spreadsheet- $427,021.30 ($.and.) Inputs: Loan Amount: $500,000 Years 30 Interest Rate : 4% Outputs: Monthly Payment $ Total Interest Paid $ Variables- What happens if you change the following? Loan Amount: $500,000 Years 15 Interest Rate : 4% Outputs: Monthly Payment $ Total Interest Paid $ Variables- What happens if you change the following? Loan Amount: $500,000 Years 15 Interest Rate : 4% Outputs: Monthly Payment $ Total Interest Paid $ Question 2 4 pts As you are evaluating the purchase, you need to review the monthly payment and total interest that will be paid over the life of the loan. The Amortization Spreadsheet is set to convert years into months. Input values exactly as they are seen in the spreadsheet- $427,021.30 ($, and.) Inputs: Loan Amount: $750,000 Years 30 Interest Rate : 5% Outputs: Monthly Payment $ Total Interest Paid $ Total Interest Paid $ Variables- What happens if you change the following? Loan Amount: $750,000 Years 30 Interest Rate : 4% Outputs: Monthly Payment $ Total Interest Paid $ Question 3 6 pts A Breakdown of the Average costs of College To give you a quick overview of the costs for a full year of college at a four-year public and private nonprofit college, we've included a breakdown of all costs associated with going to college. This includes the average college tuition cost, room and board, books and supplies, transportation and other expenses. Public two-year Public four-year Public four-year (in-district) (in-state) (out-of-state) Tuition $3,570 $9,970 $25,620 Private four-year $34,740 Room and board 58,400 $10,800 $10,800 $12,210 Books and supplies $1,420 $1,250 $1,250 $1,220 Transportation $1,780 $1,170 $1,170 $1,170 $1.030 Other expenses $2,410 $2.100 $2,100 $1,700 Total cost $17,580 $25,290 $40,940 550,900 A college student needs help calculating the cost of college. The student is attending a Public Four Year College paying In- State tuition. $25, 290 x 4 = $101, 160.00.00 Input values exactly as they are seen in the spreadsheet- $427,021.30 ($.and.) Repayment Option #1: Repayment Years-10 Interest Rate 2.7% Monthly Payment $ Total Interest Paid $ Repayment Option #2: Repayment Years-20 Interest Rate 3.5% Monthly Payment $ Repayment Years-20 Interest Rate 3.5% Monthly Payment $ Total Interest Paid $ Repayment Option #3 Repayment Years-30 Interest Rate 4% Monthly Payment $ Total Interest Paid $ Question 4 1 pts How would you describe the trade off between a 10 Year, 20 Year and a 30 Year loan? O The lowest payment is always the best. The longer term 30 year loan give a much lower payment which is worth the trade-off of more interest. The ten year loan gives a much lower total interest rate repayment The longer term loans offer lower monthly payments but higher total interest repayment