Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

Lucinda Lacy purchased a house today for $107,000 by making a down payment of 10% of the purchase price and paying closing costs of: Loan

Lucinda Lacy purchased a house today for $107,000 by making a down payment of 10% of the purchase price and paying closing costs of:

Loan origination fee 1.5% of purchase price

Appraisal fee $350

Survey fee 200

Attorneys fee 400

Processing fee 300

Escrow fee 225

Other miscellaneous costs 520

Lucinda has a mortgage loan with an interest rate of 3.9% APR, compounded monthly for 30 years. Her taxes and insurance are $352 per month. Lucinda has an estimate for a $11,500 firm, fixed price contract to remodel the house and this expense will be equally distributed over the period of her ownership. After remodeling, she estimates that she could sell the house for $137,500. Her selling expenses would be 7% sales commission plus $1000.

Manual Assignment

1. Determine manually, by trial and error, Lucindas rate of return, if she owns the house for 6 months.Show the manual calculations, including the ball-park method.

Note: show ALL handwritten manual calculations (including the value of the factors) of how you got the ROR in #1.

Excel Assignment

2. Prepare an Excel Amortization chart that shows the first six months payments.

3. Prepare an EXCEL spreadsheet to determine Lucindas rate of return if she owns the house for 6 months.

4. Use the Excel spreadsheet to determine the ROR if Lucinda keeps the house for 6 months and the selling price is $130,000 instead of $137,500.

5. Use the Excel spreadsheet to determine the ROR if the sales price is $150,000 and the repairs take longer than expected and Lucinda keeps the house for 9 months before selling and the remodeling contract is for 9 months instead of 6.

Show the equations for the EXCEL program

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

Financial Markets And Institutions A Modern Perspective

Authors: Anthony Saunders, Marcia Millon Cornett, Marcia Cornett

2nd Edition

007294109X, 978-0072941098

More Books

Students also viewed these Finance questions

Question

Considering the discussion in Box

Answered: 1 week ago