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Question 32 1 pts Q32 Suppose mortgages are self-amortizing with annual payments due at the end of each year. Two years ago, George took out
Question 32 1 pts Q32 Suppose mortgages are self-amortizing with annual payments due at the end of each year. Two years ago, George took out a 5-year mortgage for $5,000. (Houses are cheap!) At that time, the mortgage rate was 20%. His annual payment is approximately____, and his current balance due is approximately____ To answer the question, you can use the annuity table below, a financial calculator, or Excel. Annuity Table Year Annuity Factor (A) with interest rate = 20% 1 0.8333 2 1.5278 3 2.1065 14 2.5887 15 2.9906 0 2.400: 6,000 O 1.672: 3,522 0 3.272: 0 O 1,672: 1.656 Question 33 1 pts Q33 In the previous question, suppose the mortgage rate has fallen 5 percentage points. On which of the following factors should George's decision to refinance depend? 1. How big the closing cost is. 2. How much his monthly payment would be reduced if he refinanced. 3. How likely he is to stay in the house till the end of the 5 years. O 1.2 and 3 0 1 and 2 0 1 and 3 O 2 and 4
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