You want to buy a house that costs $285,000. You will make a down payment equal to 20 percent of the price of the house and fina
nce the remainder with a loan that has an APR of 5.49 percent compounded monthly. If the loan is for 30 years, what are your monthly mortgage payments
1 answer:
Answer:
$1,293.13
Explanation:
For computing the monthly mortgage payments we use the PMT formula i.e to be shown in the attachments below:
Given that,
Present value = $285,000 - $285,000 × 20% = $228,000
Future value = $0
Rate of interest = 5.49% ÷ 12 months = 0.46%
NPER = 30 years × 12 months = 360 months
The formula is shown below:
= PMT(Rate;NPER;-PV;FV;type)
The present value come in negative
After applying the above formula, the monthly mortgage payment is $1,293.13
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Answer:
The expected profit is -$13,162.
I would not recomend the investor to make this investment.
Explanation:
The expected profit can be calculated multypling the probabilities of every outcome and the profit of each outcome, and substracting the total invevstment.
The outcomes are:
1) probability 0.39 of a $23,000 loss,
2) probability 0.24 of a $8700 profit,
3) probability 0.12 of a $31,000 profit, and
4) probability 0.25 of breaking even
NOTE: It is assumed that the outcomes does not include the initial investment.
Then, the expected profit of this investment is: