# ch09 sol - CHAPTER 9 ANSWERS TO END-OF-CHAPTER QUESTIONS 1....

This preview shows pages 1–2. Sign up to view the full content.

1 CHAPTER 9 ANSWERS TO END-OF-CHAPTER QUESTIONS 1. If you had a 7 percent, \$100,000 30-year fixed-rate mortgage, how long would it take before you had repaid half the loan balance due? If you paid an extra \$100 per month to reduce the principal due on the mortgage, how long would it take to repay half the principal due? In the case where you paid an extra \$100 per month, how long would it take to repay the entire loan? (Hint: It probably would help to use a computer spreadsheet program to make these calculations; set it up in the same way that Exhibit 9.1 is set up.) Per Exhibit 9.1, loan B (bottom), the \$50,000 balance is reached, per the table, between month 9 and 10 in year 21. If the homeowner had paid an added \$100 per month, or \$765.30, the balance would drop to \$50,000 in 13 years and 9 months. An extra \$100 or a \$765.30 payment would pay off the loan in n = 247 months, about 20 years and 7 months. 3. If your mortgage balance was \$60,000 and you had a floating-rate mortgage that called for you to pay interest at an annual rate of 2.75 percent over the one-year T-bill rate and the T-bill rate has been averaging 2.05 percent, how much interest would you owe on your mortgage next month? With the rate now at 4.8 percent and the balance of \$60,000, one would pay \$60,000(0.048/12) or \$240.00 in interest. 5.

This preview has intentionally blurred sections. Sign up to view the full version.

View Full Document
This is the end of the preview. Sign up to access the rest of the document.

## This note was uploaded on 11/08/2011 for the course MAT/FIN 272 taught by Professor Burns during the Spring '11 term at Central Connecticut State University.

### Page1 / 3

ch09 sol - CHAPTER 9 ANSWERS TO END-OF-CHAPTER QUESTIONS 1....

This preview shows document pages 1 - 2. Sign up to view the full document.

View Full Document
Ask a homework question - tutors are online