Answer:
$250,000
Explanation:
The down payment is calculated as the total house price minus the mortgage amount: $550,000 - $300,000 = $250,000
There seems to be an inconsistency in this question, as saving $250,000 over 5 years suggests an annual savings of about $50,000. If one could save this amount yearly, then they should be able to afford a larger mortgage. The typical 30-year mortgage carries an average APR of slightly above 4% (usually between 4.04% - 4.16%). This would result in a monthly payment of roughly $1,151 including insurance.
Thus, consider either approaching a different bank (if your income truly supports this) or looking for a less expensive home.
Response:
Option (A) is correct.
Clarification:
It is given that:
Amount settled to retire a note = $75,000
Face value of the note = $83,000
Coupon rate = 8% (paid semi-annually)
Net book value of the note = $68,200
To determine the net gain or loss on the note's redemption, we find the difference between the note's net book value and the amount paid for its retirement. A negative result indicates a loss, while a positive result indicates a gain.
Net gain/loss:
= Net book value of the note - Amount to retire note
= $68,200 - $75,000
= -$6,800
Thus, there is a net loss of $6,800 upon the note's redemption.
The recorded amount for sales revenue at the initiation of the lease is $25,711.08.
To determine the present value of future cash flows from the lease, we apply the present value formula in excel as follows:
pv(rate,nper,pmt,fv)
where, rate is 7%, the rate embedded in the lease; nper denotes 3 years; pmt is the annual payment of $7,000; and fv remains unknown.
Using the formula, we find:
pv(6%,3,7000,0)=$18,711.08. Adding the $7,000 at commencement gives us:
$18,711.08 + $7,000 = $25,711.08.
