1answer.
Ask question
Login Signup
Ask question
All categories
  • English
  • Mathematics
  • Social Studies
  • Business
  • History
  • Health
  • Geography
  • Biology
  • Physics
  • Chemistry
  • Computers and Technology
  • Arts
  • World Languages
  • Spanish
  • French
  • German
  • Advanced Placement (AP)
  • SAT
  • Medicine
  • Law
  • Engineering
Ann [662]
2 years ago
5

A borrower takes out a 30-year adjustable rate mortgage loan for $200,000 with monthly payments. The first two years of the loan

have a "teaser" rate of 4%, after that, the rate can reset with a 5% annual payment cap. On the reset date, the composite rate is 6%. What would the Year 3 monthly payment be?
a. $955
b. $1,067
c. $1,003
d. $1,186
e. Because of the payment cap, the payment would not change.
Business
1 answer:
lara31 [8.8K]2 years ago
6 0

Answer:

1003

Explanation:

Given:

Period= 30 years, Loan amount= $200,000,

Payments- Monthly,

Teaser rate for first 2 years = 4%,

Annual payment cap=5%, Composite rate on reset date= 6%

Annual rate for 2 years =4%

Monthly rate will be 4/12 = 0.3333% = 0.003333

n=30years=360 months

Monthly payment for first 2 years = Pr(1+r)^n/((1+r)^n-1)

= 200000\times0.0033\times1.033^{360}/(1.033^{360}-1)

= 954.83

or by Excel function = PMT(0.003333,360,200000,0) = 954.83

Loan balance after 2 years = PV(0.003333,336,-954.83,0) = 192,812.36 or

Balance=A(1+r)^n-PMT\times(1+r)^n-1)/i

=200000(1.0033)^{24}-954.83(1+0.003333)^{24}-1)/0.003333

= 192,812.36

Composite rate is 6% but payment is capped at 5%. So new payment from year 3 is 954.83×1.05=1002.57=1003

You might be interested in
Google Maps is a web mapping service that provides street maps and directions. A Google Maps component can be added to a busines
Hoochie [10]

Answer:

(C) Service-oriented architecture

Explanation:

Service-oriented architecture -

It is a type of software which is designed , to provide the services to other components via application components via a communication protocol in a network .

The principle of SOA does not depend on technologies , products , vendors .

<u>The properties of SOA are as follows - </u>

1. It is a black box for the consumers .

2. It may consist of other underlying services .

3. It is self-contained .

4. It represents the activity of business with a specified outcome .

6 0
3 years ago
Imagine that you work for a life insurance company. You are setting premiums for insurance based on life expectancy. Assuming yo
jok3333 [9.3K]

Answer:

magine that you work for a life insurance company. You are setting premiums for insurance based on life expectancy. Assuming you charge a higher premium for people expected to have shorter lives, you know that ____older people____ will generally pay more for life insurance than ___younger people_____.

Explanation:

Setting life insurance premiums take into consideration the age of the insured (insurance policyholder).  Other factors considered in setting premiums are gender, medical history, hobby, and career.  Insurance premiums are periodic payments which the insured is expected to make to the insurance company (insurer) to cover the cost of the financial service being rendered and contribute to the defined benefits that will be paid upon expiration or in the event of the risk occurring.

3 0
2 years ago
Harry goes to the local Staples store to purchase a laptop computer. He asks many questions of the salesclerk, compares various
zimovet [89]

Answer: Suggestive selling

Explanation: the recommendation to purchase an extended warranty service in addition to the purchase of a laptop computer by the salesperson is an example of suggestive selling. It is a form of stimulus-response presentation involving suggesting an initial or an additional purchase (the extended warranty). It is also known as add-on selling or upselling and is used to increase the purchase amount of the buyer thus increasing revenue of the store.

3 0
3 years ago
Soccer Wholesale purchased land and a warehouse for $990,000. In addition to the purchase price, Soccer Wholesale makes the foll
Elan Coil [88]

Answer:

Cost of land= $1,124,100

Explanation:

<em>According to International accounting standards(IAS) 16 ,The cost of land includes purchase cost plus all other costs necessary to bring and make it ready for the intended use. </em>

<em>These costs include purchase cost, fees and commission associated with the purchase transaction. </em>

Further more, included in the historical cost are the net demolition cost of old structure to prepare the land for use. Net cost here means cost of demolition less any incidental proceed from the old structure.

However, remember that land is not depreciated because it has an infinite life span.

So using the historical cost principle the cost of the land

Cost of land = 990,000 + 49,600 +2300 + 6, 900 + 75,300=  1,124,100.00

Cost of land= $1,124,100

6 0
3 years ago
Assume that, on January 1, 2021, Matsui Co. paid $1,795,200 for its investment in 74,800 shares of Yankee Inc. Further, assume t
mixas84 [53]

Answer: $1,852,320

Explanation:

First find out the proportion owned by Matsui.

= 74,800 shares / 220,000

= 34%

The investment at the end of the year is:

= Cost of investment + Shares of net income - Share of dividend

Share of income:

= Percentage ownership * Net income

= 34% * 240,000

= $81,600

Share of dividend:

= 34% * 72,000

= $24,480

Investment at end of year:

= 1,795,200 + 81,600 - 24,480

= $1,852,320

8 0
3 years ago
Other questions:
  • A Broadway play company can only charge one price for tickets to a given performance of its play. The company manager notices th
    9·1 answer
  • The country of Dalima has long been a substantial exporter of agricultural goods, reflecting its unusual abundance of arable lan
    5·1 answer
  • Which stock exchange is described below?
    14·1 answer
  • Harriet works at Good Steaks,a local bar and restaurant.Her manager is always barking orders at her,saying she needs to move fas
    7·1 answer
  • Moose Industries has a corporate tax rate of 25%. Last year the company realized $14,000,000 in operating income (EBIT). Its ann
    14·1 answer
  • Sissie owns two items of business equipment. Both were purchased in 2015 for $100,000, both have a 7-year MACRS recovery period,
    15·1 answer
  • Opportunity cost is:
    6·1 answer
  • Help ASAP please !!!!!!
    8·1 answer
  • The risk premium for common stocks
    13·1 answer
  • True or false the majority of managerial communication is written in one form or another.​
    5·1 answer
Add answer
Login
Not registered? Fast signup
Signup
Login Signup
Ask question!