Question
Task #7 (Mortgage). In the mortgage example, given in class (Unit 3, slides 57-59) we calculated the monthly payment. You might be interested which part
Task #7 (Mortgage). In the mortgage example, given in class (Unit 3, slides 57-59) we calculated the monthly payment. You might be interested which part of this payment is interest and which part is repayment of the debt. Use a spreadsheet to calculate the interest payment, repayment of principal and the loan balance for every month. Draw a graph that shows nicely how the share of interest decreases over time while the share of repayment increases.
Task #8 (Rule of 752). A website that helps people to make the right nancial decisions has come up with the rule of 752. It says that the opportunity cost of $1 of weekly expenses during ten years (in terms of money that you could have instead on your bank account in ten years) is $752. The rule should help you to avoid some bad habits. For example, if you buy a coee to go and a cookie at Starbucks every working day for $4 more than it would cost to have a coee and a cookie at home (almost nothing), you could have instead of this weekly expense of $20 a nice amount equal to $20 752 = $15, 040 on your bank account in ten years. The website just states that the author assumed a 7% rate of return on your investment with weekly compounding. How exactly did the author come up with the number of 752?
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