Jolene and her husband are looking to purchase a house. The are looking to get a 15-year mortgage at a fixed annual interest rate of 3.75%. What is the maiximum home price they can afford if their budget allows them to make $1,875 monthly payments? Edwardo competes in triathalon's and is in need of a new bike. He finances a $2,350 bike over 2 years at an APR of 5.95%. How much will his monthly payment be on this bike? Billy took out $12,000 in student loans to pay for his schooling. If he must pay the loan back over 10 years at an annual interest rate of 4.25%, how much interest will he end up paying on this loan if he pays it off on time?

Jolene and her husband are looking to purchase a house. The are looking to get a 15-year mortgage at a fixed annual interest rate of 3.75%. What is the maiximum home price they can afford if their budget allows them to make $1,875 monthly payments? Edwardo competes in triathalon's and is in need of a new bike. He finances a $2,350 bike over 2 years at an APR of 5.95%. How much will his monthly payment be on this bike? Billy took out $12,000 in student loans to pay for his schooling. If he must pay the loan back over 10 years at an annual interest rate of 4.25%, how much interest will he end up paying on this loan if he pays it off on time?

Personal Finance

13th Edition

ISBN:9781337669214

Author:GARMAN

Publisher:GARMAN

Chapter8: Vehicle And Other Major Purchases

Section: Chapter Questions

Problem 1FPC

See similar textbooks

Similar questions

Russ and Roz Rosow have a ten-year-old loan with which they purchased their house. Their interest rate is 10 5/8%. Since they obtained this loan, interest rates have dropped, and they can now get a loan for 9 1/4% through their credit union. Because of this, the Rosows are considering refinancing their home. Each loan is a 30-year simple interest amortized loan, and neither has a prepayment penalty. The existing loan is for $139,000, and the new loan would be for the current amount due on the old loan. (Round your answers to the nearest cent.) (a) Find their monthly payment with the existing loan.$ (b) Find the loan amount for their new loan.$ (c) Find the monthly payment with their new loan.$ (d) Find the total interest they will pay if they do not get a new loan.$ (e) Find the total interest they will pay if they do get a new loan.$ (f) Should the Rosows refinance their home? Why or why not? They should refinance. They will pay less interest with the new loan.They should not…
Edwardo competes in triathalon's and is in need of a new bike. He finances a $2,350 bike over 2 years at an APR of 5.95%. How much will his monthly payment be on this bike?
Russ and Roz Rosow have a ten-year-old loan with which they purchased their house. Their interest rate is 10 5/8%. Since they obtained this loan, interest rates have dropped, and they can now get a loan for 9 1/4% through their credit union. Because of this, the Rosows are considering refinancing their home. Each loan is a 30-year simple interest amortized loan, and neither has a prepayment penalty. The existing loan is for $139,000, and the new loan would be for the current amount due on the old loan. (Round your answers to the nearest cent.) (a) Find their monthly payment with the existing loan.$ (b) Find the loan amount for their new loan.$ (c) Find the monthly payment with their new loan.$ (d) Find the total interest they will pay if they do not get a new loan.$ (e) Find the total interest they will pay if they do get a new loan.$
John and Marsha are buying their first home. It has three bedrooms, two baths, and a two car garage. The total cost is $266,500. They have $35,000 for the down payments. They can finance the difference through their local credit union with a 30 year loan at 3.95%. What will their monthly payment be?
Kayla Thompson is married and currently rents an apartment for $650 per month and paying $375 annually for renter's insurance. Her landlord required a $1,000 security deposit on the apartment. She just found a small townhouse she can buy for $285,000. She has enough cash for a $10,000 down payment and $4,100 in closing costs. Her bank is offering 30-year mortgages at a 6 percent annual rate. Kayla estimated the following costs as a percentage of the home's price: property taxes, 2.5 percent; homeowner's insurance, 0.5 percent; and maintenance, 0.7 percent. She is in the 25 percent tax bracket, has an after-tax rate of return on invested funds of 4 percent, and expects the townhouse to appreciate 3 percent per year. Using Worksheet 5.2, calculate the cost of each alternative and recommend the least costly option - rent or buy - for Kayla. Assume that Kayla uses the standard deduction of $24,000. Round the answers to the nearest dollar. Cost of renting: $ Cost of buying: $ Kayla…
Philip works at a nursing home as an aide and earns $27,000 a year. IF he went to school to get a nursing degree he could earn $50,000 in the first year. Philip knows this but he also knows that tuition and fees at a nearby college could cost about $45,000(total). He can get a student loan for 5% with 10 years to repay the loan. What is the total cost of the student loans?
Rachel and Alexander Harrison need to calculate the amount they can afford to spend on their first home. They have a combined annual income of $67,500 and have $37,000 available for a down payment and closing costs. The Harrisons estimate that homeowner's insurance and property taxes will be $150 per month. They expect the mortgage lender to use a 28 percent (of monthly gross income) mortgage payment affordability ratio, to lend at an interest rate of 6 percent on a 30-year mortgage, and to require a 10 percent down payment. Based on this information, use the home affordability analysis form in Worksheet 5.3 to determine the highest-priced home the Harrisons can afford. Assume that closing costs are one-half of the down payment. Round the answer to the nearest dollar. $
Nathan and Stephanie are saving for their daughter's college education. Their daughter, Paige, is now 8 years old and will be entering college 10 years from now (t = 10). College tuition and expenses at State U. are currently $16,000 a year and are expected to increase at a rate of 4% a year. They expect Paige to graduate in 4 years (if Paige wants to go to graduate school, she's on her own). Tuition and other costs will be due at the beginning of each school year (at t = 10, 11, 12, and 13). So far, Nathan and Stephanie have built up $9,000 in the college savings account. Their long-run financial plan is to contribute $3,000 a year at the beginning of each of the next five years (at t = 0, 1, 2, 3, and 4). Then they plan to make 6 equal annual contributions at the end of each of the following 6 years (t = 5, 6, 7, 8, 9, and 10). Their investment account is expected to earn 8%. How large must the annual payments be in the subsequent 6 years (t = 5, 6, 7, 8, 9, and 10) to meet their…
Deborah is planning to buy a car in 3 years. She intends to buy the best car she can for $20 000. She has $17 500 to invest in an account that compounds interest semi-annually. What rate of interest will Deborah need in order to meet her goal?
Nicole is taking out an amortized loan for $33,000 to buy a new car and is deciding between the offers from two lenders. She wants to know which one would be the better deal over the life of the car loan, and by how much. (a) A bank has offered her a 5-year car loan at an annual interest rate of 6.5%. Find the monthly payment. (b) Her credit union has offered her a 7-year car loan at an annual interest rate of 6.5%. Find the monthly payment. (c) Suppose Nicole pays the monthly payment each month for the full term. Which lender's car loan would have the lowest total amount to pay off, and by how much? • Bank The total amount paid would be $ ____ less than to the credit union. • Credit union The total amount paid would be $ ____ less than to the bank.
Dreya and Fred bought a $225,000 house. They made a 10% down payment and financed the rest at an APR of 4.5% over 15 years. How much will their monthly payment be for this loan? If Samatha finances the entire cost of a $700 bike at an APR of 2.95%, how much will she end up paying in total for the bike after paying off her loan in 2 years? You financed a boat for $12,500 boat at an APR of 6.25% over 4 years. How long will it take to pay off the boat if you make $400 monthly payments? Round to two decimal places.
Patrick is a 24 year old college graduate who has just been hired by an engineering firm as a technician. Patrick has decided it is time to grow up and move out! 1. Patrick knows that he can afford a monthly mortgage payment of $1000 (at most!). The bank will offer him a mortgage rate of 4% compounded monthly over a 25 year period. Calculate the most expensive home that Patrick could afford.