+1-415-670-9189
info@expertsmind.com
Which loan should she sign up for
Course:- Financial Management
Reference No.:- EM13942915




Assignment Help
Assignment Help >> Financial Management

Susan wants to buy a house for $200,000. US Bank will give her the loan at 3.5% for 30 years if she puts 20% down and Dacotah Bank will give her the loan at 3.8% for 30 years if she puts 10% down. There are NO other options.

a) Which loan should she sign up for? Pick one, no explanation needed. What is her monthly payment?

b) After 5 years, Susan is approached by a philanthropic group known as C.S.C. They offer to lend her $50,000 interest free for an indefinite period of time, provided she joins their group. Susan takes up the offer and uses the money to pay off some of her mortgage. What will be her new NPER (how many years will it take for her to pay off her remaining mortgage)?

c) After another 7 years, a private bank offers to take over the remaining mortgage at 3%. What will be her first month interest payment if she signs up with them? (To do this, find the remaining mortgage after 12 years. Use this mortgage amount as the new principle. First month interest payment will be the monthly rate multiplied by principle).

d) Assume, there is a $1,000 one-time processing fee for signing up with the private bank in the previous part (c). Does it make sense to move the mortgage over to the private bank 3%? Explain.




Put your comment
 
Minimize


Ask Question & Get Answers from Experts
Browse some more (Financial Management) Materials
Investor buys a stock today assuming to resell it one year from now for $70. Dividend expected to be paid in one year is $10. If required rate of return is 25%, how much the i
Essary Enterprises has bonds on the market making annual payments, with eleven years to maturity, a par value of $1,000, and selling for $970. At this price, the bonds yield 7
A treasury manager is in the process of developing cash transfer rules for the firm. Currently, the firm's bank charges $15 per wire and $0.30 per ACH. The ACH takes 1 day lon
You start work at a new firm and learn that? it's company policy to never take a trade discount. When you ask your boss about ?this, she says the firm needs the trade credit t
M Company is considering whether to establish a sale distribution center in China. Given the large Chinese consumer market, M company estimates that its net sales revenues wil
LO.8, 10 Karl purchased his residence on January 2, 2014, for $260,000, after having lived in it during 2013 as a tenant under a lease with an option to buy clause. On August
Product A has a contribution margin per unit of $500 and required 2 hours of machine time. Product B has a contribution margin per unit of $1,000 and requires 5 hours of machi
Rossiter restaurants is analyzing a project that requires 180,000 of fixed assets. when the period ends, those assets are expected to have an after tax salvage value of 45,000