Name: on Topic 1.6 Analyzing Loans Applied Math 40S Assignment 1. Sara and Sylvie have found a small house in the St. Norbert neighbourhood of Winnipeg. They can buy the house for $179,900. After negotiating with compounded semi-annually, with regular weekly payments for 15 years. their bank, they have been offered a mortgage for 90% of the cost at 4.5% a. How much will the down payment be? b. How much will the principal of the mortgage be? c. What will the regular payment amount be? N= I% PUE PMT= FV P/Y= C/Y PMT:EN BEGIN d. How much interest will they pay in all? e. How long will it take before they have paid off half the loan? N= I%= PU PMT= FU= P/Y= C/Y= PMT ENL BEGIN Name ons AS 2. Frank wants to consolidate his debt of $37.478 into one loan, with payments at the end of each month. The bank has offered a debt consolidation loan at 2 4.5%, compounded monthly, for a term of 6 years. a. What will Frank's monthly payments be? NE I% PUS FU PAY PMT CY= PMT ERIK BEGIN b. What balance is owing after 3 years? c. How much interest will he pay in all? TOE 3 3. Lorraine and Maurice want to purchase a house valued at $275 000.00, Bank A agrees to give them a mortgage if they make a down payment of 10% of the purchase price of the house. The interest rate on the mortgage will be 4.5% compounded semi-annually for 25 years. a. Determine their monthly mortgage payment. N= I% PV= PMT= FV= PY= CY= PMT:ENK BEGIN b. Lorraine and Maurice want a lower monthly mortgage payment and visit Bank B. If the purchase price is still the same, they still make a down payment of 10%, and the mortgage is still compounded semi- annually, what could Bank B do in order to offer a lower monthly mortgage payment than Bank A? 4 4. The Richards have a mortgage of $200 000 at an interest rate of 6.05% compounded semi-annually and amortized over 25 years. The monthly a. I the Richards divide their monthly payment in half and make their payment every two weeks instead, how many payments will be mortgage payment is $1285.56. required to pay off the mortgage? Na I% der PMT= FVE PAY= Y= PMT:ENE BEGIN b. How much will they pay in interest? C. How much will they save in interest? Name: 5 5. The Reimers have purchased a house valued at $250 000.00 and have made a down payment of $25 000.00 a. Calculate their monthly mortgage payment if they obtain a mortgage amortized over 15 years at an interest rate of 5.50% compounded semi-annually. N= 1%= PU= PMT= FV= PY= PMT EN BEGIN C/Y= b. How much equity will the Reimers have in their house after 5 years if the value of the house appreciates at a rate of 2.00% per year? The equity in the home is equal to the value of the home subtract the amount left owing on the mortgage. 6. Kira purchases a sofa for $1015.87 (taxes included). The store offers her a promotion of 0% interest with no payments for one year. If Kira does not pay the amount in full within one year, interest will be charged from the date of purchase at an annual rate of 28.80%, compounded monthly a. If Kira does not make any payments, what will the department store bill her one year after the date of purchase? N= I%= PV= PMT= FV= PAY= CAYE PMT EN BEGIN b. State a different compounding period such that the overall cost of the sofa is lower than if the annual interest rate were compounded monthly 7 Name 7. Oscar and Alfred have saved $40,000 for a down payment on a house and can afford a bi-weekly mortgage payment of $2000. The obtain a mortgage from a bank for 3.5% compounded semi-annually amortized over 25 years. a. What is the maximum the bank will lend them for their mortgage? N= I%= PV= PMT= FV= P/Y= C/Y= PMTEENK BEGIN b. What is the maximum house price they can afford? I 8. Eleanor and Lorena purchased a house priced at $354,000. They made a $60,000 down payment and obtained a mortgage amortized over 25 years at an interest rate of 4.75%, compounded semi-annually. a. Determine their monthly mortgage payment. NE I% PU= PMT FV= P/Y= CAY PMT:ENE BEGIN b. What will be the balance owing on the mortgage after 5 years? c. After the initial 5-year period Eleanor and Lorena renegotiate their mortgage. The bank offers them an interest rate of 2.25%, compounded semi-annually. If their monthly payment remains the same, how much sooner will they be able to pay off their mortgage? N= 1% PU= PMT= FUE P/Y= C/Y= PMTEERL BEGIN
