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
Ymorist [56]
3 years ago
12

Emily is considering purchasing a new home for $400,000. She intends to put 20% down and finance $320,000, but is unsure which f

inancing option to select. Emily is considering the following options: o Option 1: Fixed rate mortgage over 30 years at 8% interest, zero points, or o Option 2: Fixed rate mortgage over 30 years at 4% interest, plus two discount points. How long would her financial planner recommend that she live in the house to break even using Option 2 presuming she is not financing the points
Business
1 answer:
frez [133]3 years ago
5 0

Answer:

The break even for Emily using Option 2 presuming she is not financing the points is 7.8

Explanation:

Solution

In this case, in other to determine this problem, we need to find the monthly payments for both options

For option 1 (EMI)

Where

P = 320,000,

r =0.08/12 = 0.00667

n = 360

Now,

EMI = P *r * (1 + r)^n/  (1 + r)^n -1

So,

EMI =320,000 * 0.00667 * (1 + 0.00667)^360/ (1 + 0.00667)^360

EMI = 23329.56/9.93573

=2348.05

For Option 2

P = 320,000,

n = 360

r = 4%/12 = 0.003333

Thus,

EMI =320,000 * 0.003333 * (1 + 0.003333)^360/ (1 + 0.003333)^360

EMI = 3534.398/2.313498

=1527.73

Note:

When Emily is paying  2 discount point in the second option, she is paying the following:

2% * 320000 = 6400

Also she is saving the following:

2.348.05 - 1527.73

=820.32 on payment (monthly) because of the reduction of EMI in the second option

Thus,

The break even time is =payments  due to points/ monthly savings

=6400/820.32

=7.8

You might be interested in
Kelly, Lars, and Mona agree to be partners in Neighborhood Delivery Service (NDS), splitting the profits equally. Kelly contribu
Vikentia [17]

Answer:

2) all of the partners in proportion to their shares of the profits

Explanation:

Partnership refers to a mutual agreement between two or more individuals, deciding to carry on a business and share it's risks and rewards in the profit sharing ratio as stipulated, or as provided in the partnership deed.

Upon retirement or death of any of the partners, the partnership is said to have been dissolved. Upon dissolution, the profits and losses arising consequently shall be shared by the remaining partners in their profit sharing ratio. A firm may decide to voluntarily dissolve too.

In the given case, upon dissolution, liabilities exceed assets and thus indicate a loss.

This loss shall be borne by all of the partners in their profit sharing ratio and not in the ratio of their capitals.

6 0
4 years ago
Differentiation business strategies are often associated with premium prices. There are, however, reasons why a firm would NOT w
Natalija [7]

Answer: e. To drive up market share

Explanation:

Differentiation strategies involve adding features to a good to make it stand out from the Competition. Since these features are usually beneficial, the value of the good goes up and the company selling them can charge more. This is the main way things are done in Monopolistic markets.

However, sometimes it is best to charge the same price the Competition is charging even though you have a better product. This way the company is able to capture Market Share because the consumers will believe they are getting a better value for their money. For instance, if a company was selling Toyotas at $2,000 and it's competitor was selling the same Toyota but with 2 extra tires for the same $2,000 who would you use? The Competitor most likely.

This is why a firm might want to keep prices in line with competitors.

4 0
3 years ago
business ethics chapter 4 critics have argued that, from an ethical perspective, altruistic corporate social responsibility (CSR
Gala2k [10]

Answer:

True

Explanation:

Altruistic Corporate Social Responsibility is a philanthropic approach of the company which undermines the interests of the shareholders because such programs are not approved by the shareholders. This clash between the interests of shareholders and the society is the argue that critics quote to protect the shareholders rights.

7 0
3 years ago
What element of Pinterest can help potential followers learn more about your product and company?
madreJ [45]
Could the answer be advertisements
5 0
3 years ago
Budgeting helps consumers reach their financial goals by helping them do which of the following?
Firdavs [7]

Answer:

<u><em>C. Keep their expenses below their income</em></u>

Explanation:

7 0
3 years ago
Other questions:
  • Using Exhibit 2–6, Typical After-Tax Budget Allocations for Different Life Situations, calculate the budget allocations for Jami
    5·1 answer
  • Which of the following statements is NOT true regarding the importance of the role that an operations manager plays in addressin
    10·1 answer
  • Ill give someone brainliest if they give me brainliest
    11·2 answers
  • In 2019, Wesley has a fairly simple tax situation with moderate wage income and a modest amount of interest income. Wesley, age
    8·1 answer
  • "Problems and Applications Q2
    10·1 answer
  • Treasury bonds paying an 8% coupon rate with semiannual payments currently sell at par value. What coupon rate would they have t
    5·1 answer
  • g The difference between the small business owner and the entrepreneur is that the entrepreneur: Group of answer choices assumes
    12·1 answer
  • Armed only with his fingers, the owner decides that the safest forecasting approach is a linear trend line. His fingers are achi
    6·1 answer
  • If Anna buys a car for $18,000 with a down payment of $2,000 and is given a 3-year loan with an APR of 5 percent and monthly pay
    14·1 answer
  • Alex purchases a computer from dell to be delivered via fed ex. Dell delivers the computer to fed ex to be shipped to alex. Duri
    10·1 answer
Add answer
Login
Not registered? Fast signup
Signup
Login Signup
Ask question!