SlideShare una empresa de Scribd logo
1 de 9
Descargar para leer sin conexión
To my substitute: The student's assignment is in this document on
the smart board. They know what to do. Tennyson will help you
shut everything down after class.

Students should be sitting and working in groups on these
problems and collaborating to write the answers on the smart
board. I will be verifying their work first thing tomorrow
morning.

These are wonderful students, sit back and watch them do their
thing. ;-)

                                             Thanks,
                                             Darren Kuropatwa
Ms. Johnston has decided to buy a home. She requires a $65 000 mortgage. The
mortgage interest rate is 7.75%, and she will repay the mortgage with monthly
payments. She needs to decide whether she will select a 20- or 15-year
amortization term. How much do her monthly payments increase, and how
much money will she save if she chooses a 15-year term instead of a 20-year
term? Would you advise Ms. Johnston to get a 15- or 20-year mortgage? Why?
Applied Math 40S Slides May 9, 2007 - Part 2
T. Bekka needs a $105 000 mortgage which he will repay with monthly
payments in 25 years. The first bank he visits offers a mortgage at 8.5%, and
the second bank at 7.9%.
 (a) How much does he save each month if he takes the second offer?




(b) How much does he save over the life of the mortgage if he takes the
second offer?
Applied Math 40S Slides May 9, 2007 - Part 2
Rent or Buy? A Case Study ...
The Browns have an opportunity to buy a home valued at $50 000 with a down
payment of $5000 and a mortgage of $45 000, or rent the home for $525 per
month.
If they buy, they will get a 15-year mortgage at 7.5%. Annual property taxes
are approximately 1.5% of the market value (i.e. the sale price) of the home.
They expect their home to appreciate in value by about 2% per year. (That is, it
will become 2% MORE VALUABLE each year. If it is worth $100 this year,
next year it will be worth $102 and the year after that it would be worth
$104.04.)
If they rent, their rental payments will increase by 3% each year, and they
expect to get a 7% annual return on their investment of the $5000 they did not
use as a down payment.


                           Questions on next page ...
(a) What is the size of the monthly mortgage payment?

(b) What will their equity be in the home after two years of ownership?

(c) After one year, how does the cost of payments plus property taxes
compare with the cost of rental payments?

(d) After 10 years, how does the annual cost of payments plus property
taxes compare with the annual cost of rental payments?

(e) What might be some reasons for the Brown family to rent instead of
buy - even though renting seems to be more expensive in the long run?

(f) What is the net cost of owning the home for 10 years? Of renting for
10 years?
Applied Math 40S Slides May 9, 2007 - Part 2
The Answers ...
(1) Savings are: $126,892.80 - $109,312.20 = $17,580.60
Might advise Ms. Johnston to get the 15-year mortgage if she can afford an
additional $80 per month mortgage payment because over the life of the
mortgage she will save over $17,000, and be free of debts five years sooner.

(2)   (a) Monthly saving is $40.45      (b) Total saving in 25 years is $12,134.43

(3)   (a) $414.23 (b) $8538.72
  (c) Renting is more expensive by: $6300.00 - $5720.76 = $579.24
  (d) Renting is more expensive by: $8220.12 - $5885.01 = $2335.11
  (e) Possible answers:
  • They do not have enough money for a down payment, or decide to spend the
money on something else.
  • They plan to stay in this home for only a short time.
  • They have a poor credit rating and cannot get a mortgage.
  (f) Net Ownership Cost: =Total Costs - Credits = $62,919.89 - $29,271.39 =
$33,648.50
  Net Rental Cost = $72,222.44 - $4835.76 = $67,386.68
  Therefore, $67,386.68 - $33,648.50 = $33,738.18 greater renting than owning.

Más contenido relacionado

La actualidad más candente

Living in indianapolis
Living in indianapolisLiving in indianapolis
Living in indianapolis11dinhedward
 
'Gutted and Waiting': Nightmare Continues for NJ Homeowners After Sandy
'Gutted and Waiting': Nightmare Continues for NJ Homeowners After Sandy'Gutted and Waiting': Nightmare Continues for NJ Homeowners After Sandy
'Gutted and Waiting': Nightmare Continues for NJ Homeowners After Sandyjudiciousneophy01
 
Large natural catastrophes in 2008
Large natural catastrophes in 2008Large natural catastrophes in 2008
Large natural catastrophes in 2008Andre Kaasik
 
Sydney house prices
Sydney house pricesSydney house prices
Sydney house pricesLee Morley
 
My parents filed bankruptcy and failed to reaffirm their loan on their house....
My parents filed bankruptcy and failed to reaffirm their loan on their house....My parents filed bankruptcy and failed to reaffirm their loan on their house....
My parents filed bankruptcy and failed to reaffirm their loan on their house....jacelyneqwisasuveman
 
Choosing between "Annuities"...?
Choosing between "Annuities"...?Choosing between "Annuities"...?
Choosing between "Annuities"...?charleenjie0181
 
If i file chapter 7 bankruptcy what happens?
If i file chapter 7 bankruptcy what happens?If i file chapter 7 bankruptcy what happens?
If i file chapter 7 bankruptcy what happens?ofeliaymdtuucdikworth
 
30 Yr Traditional Loan Vs. VA Hybrid - Which is Better?
30 Yr Traditional Loan Vs. VA Hybrid - Which is Better? 30 Yr Traditional Loan Vs. VA Hybrid - Which is Better?
30 Yr Traditional Loan Vs. VA Hybrid - Which is Better? Eric Kandell
 
The Impact of Student Loans on Homeownership
The Impact of Student Loans on HomeownershipThe Impact of Student Loans on Homeownership
The Impact of Student Loans on HomeownershipZillow
 
Government Help To Avoid Foreclosure
Government Help To Avoid ForeclosureGovernment Help To Avoid Foreclosure
Government Help To Avoid Foreclosuregleaminglegacy635
 
Just Married Budget
Just Married BudgetJust Married Budget
Just Married BudgetChrissyYCDSB
 

La actualidad más candente (20)

Lesson 6 simple discount
Lesson 6   simple discountLesson 6   simple discount
Lesson 6 simple discount
 
Living in indianapolis
Living in indianapolisLiving in indianapolis
Living in indianapolis
 
Brenda Torpy BWH Boston 2011
Brenda Torpy BWH Boston 2011Brenda Torpy BWH Boston 2011
Brenda Torpy BWH Boston 2011
 
Tatesbrook 2008 Financial Report
Tatesbrook 2008 Financial ReportTatesbrook 2008 Financial Report
Tatesbrook 2008 Financial Report
 
'Gutted and Waiting': Nightmare Continues for NJ Homeowners After Sandy
'Gutted and Waiting': Nightmare Continues for NJ Homeowners After Sandy'Gutted and Waiting': Nightmare Continues for NJ Homeowners After Sandy
'Gutted and Waiting': Nightmare Continues for NJ Homeowners After Sandy
 
Large natural catastrophes in 2008
Large natural catastrophes in 2008Large natural catastrophes in 2008
Large natural catastrophes in 2008
 
Spiwe1
Spiwe1Spiwe1
Spiwe1
 
Payday loans
Payday loansPayday loans
Payday loans
 
Sydney house prices
Sydney house pricesSydney house prices
Sydney house prices
 
What’s Affordable to You?
What’s Affordable to You?What’s Affordable to You?
What’s Affordable to You?
 
My parents filed bankruptcy and failed to reaffirm their loan on their house....
My parents filed bankruptcy and failed to reaffirm their loan on their house....My parents filed bankruptcy and failed to reaffirm their loan on their house....
My parents filed bankruptcy and failed to reaffirm their loan on their house....
 
Choosing between "Annuities"...?
Choosing between "Annuities"...?Choosing between "Annuities"...?
Choosing between "Annuities"...?
 
If i file chapter 7 bankruptcy what happens?
If i file chapter 7 bankruptcy what happens?If i file chapter 7 bankruptcy what happens?
If i file chapter 7 bankruptcy what happens?
 
Free House Presentation
Free House PresentationFree House Presentation
Free House Presentation
 
Scent of change
Scent of changeScent of change
Scent of change
 
30 Yr Traditional Loan Vs. VA Hybrid - Which is Better?
30 Yr Traditional Loan Vs. VA Hybrid - Which is Better? 30 Yr Traditional Loan Vs. VA Hybrid - Which is Better?
30 Yr Traditional Loan Vs. VA Hybrid - Which is Better?
 
The Impact of Student Loans on Homeownership
The Impact of Student Loans on HomeownershipThe Impact of Student Loans on Homeownership
The Impact of Student Loans on Homeownership
 
Government Help To Avoid Foreclosure
Government Help To Avoid ForeclosureGovernment Help To Avoid Foreclosure
Government Help To Avoid Foreclosure
 
Wetherell
WetherellWetherell
Wetherell
 
Just Married Budget
Just Married BudgetJust Married Budget
Just Married Budget
 

Similar a Applied Math 40S Slides May 9, 2007 - Part 2

Applied Math 40S Slides May 10, 2007
Applied Math 40S Slides May 10, 2007Applied Math 40S Slides May 10, 2007
Applied Math 40S Slides May 10, 2007Darren Kuropatwa
 
You purchase a 7 percent $10,000 bond for $9,400 plus $161 in accr.docx
You purchase a 7 percent $10,000 bond for $9,400 plus $161 in accr.docxYou purchase a 7 percent $10,000 bond for $9,400 plus $161 in accr.docx
You purchase a 7 percent $10,000 bond for $9,400 plus $161 in accr.docxwoodruffeloisa
 
Present value analysis Business Finance homework help.docx
Present value analysis Business Finance homework help.docxPresent value analysis Business Finance homework help.docx
Present value analysis Business Finance homework help.docxwrite5
 
Applied Math 40S May 14, 2008
Applied Math 40S May 14, 2008Applied Math 40S May 14, 2008
Applied Math 40S May 14, 2008Darren Kuropatwa
 
Applied Math 40S Slides May 11, 2007
Applied Math 40S Slides May 11, 2007Applied Math 40S Slides May 11, 2007
Applied Math 40S Slides May 11, 2007Darren Kuropatwa
 
1. If you invest $10,000 at 10 interest, how much will you have in .docx
1. If you invest $10,000 at 10 interest, how much will you have in .docx1. If you invest $10,000 at 10 interest, how much will you have in .docx
1. If you invest $10,000 at 10 interest, how much will you have in .docxvrickens
 
Applied Math 40S May 13, 2008
Applied Math 40S May 13, 2008Applied Math 40S May 13, 2008
Applied Math 40S May 13, 2008Darren Kuropatwa
 
Using the Rule of approximate the following.docx
Using the Rule of approximate the following.docxUsing the Rule of approximate the following.docx
Using the Rule of approximate the following.docxwrite31
 
1- Jenelle bought a home for $450-000- paying 10- as a down payment- a.docx
1- Jenelle bought a home for $450-000- paying 10- as a down payment- a.docx1- Jenelle bought a home for $450-000- paying 10- as a down payment- a.docx
1- Jenelle bought a home for $450-000- paying 10- as a down payment- a.docxtodd941
 
1. The unpaid balance at the start of a​ 28-day billing cycle was ​$.docx
1. The unpaid balance at the start of a​ 28-day billing cycle was ​$.docx1. The unpaid balance at the start of a​ 28-day billing cycle was ​$.docx
1. The unpaid balance at the start of a​ 28-day billing cycle was ​$.docxcarlstromcurtis
 
1- If a firm paid a dividend of $0 this morning- and the dividend grow.docx
1- If a firm paid a dividend of $0 this morning- and the dividend grow.docx1- If a firm paid a dividend of $0 this morning- and the dividend grow.docx
1- If a firm paid a dividend of $0 this morning- and the dividend grow.docxPhilzIGHudsonl
 
1.You have $24,435.78 in a brokerage account, and you plan to depo.docx
1.You have $24,435.78 in a brokerage account, and you plan to depo.docx1.You have $24,435.78 in a brokerage account, and you plan to depo.docx
1.You have $24,435.78 in a brokerage account, and you plan to depo.docxpaynetawnya
 
1. The factor that affects interest rates isa.            product.pdf
1. The factor that affects interest rates isa.            product.pdf1. The factor that affects interest rates isa.            product.pdf
1. The factor that affects interest rates isa.            product.pdfakhilc61
 
Week 5 AssignmentQUESTION 4-3An annuity is defined as a s.docx
Week 5 AssignmentQUESTION 4-3An annuity is defined as a s.docxWeek 5 AssignmentQUESTION 4-3An annuity is defined as a s.docx
Week 5 AssignmentQUESTION 4-3An annuity is defined as a s.docxco4spmeley
 
1- A borrower obtains a fully amortizing CPM loan for $125-000 at 6 pe.pdf
1- A borrower obtains a fully amortizing CPM loan for $125-000 at 6 pe.pdf1- A borrower obtains a fully amortizing CPM loan for $125-000 at 6 pe.pdf
1- A borrower obtains a fully amortizing CPM loan for $125-000 at 6 pe.pdfWilliamTvuHendersonk
 
Question 1. You can earn $40 in interest on a $1,000 deposit for.docx
Question 1. You can earn $40 in interest on a $1,000 deposit for.docxQuestion 1. You can earn $40 in interest on a $1,000 deposit for.docx
Question 1. You can earn $40 in interest on a $1,000 deposit for.docxmakdul
 
(Bond valuation) You own a bond that pays $110 in annual interest- wit.docx
(Bond valuation) You own a bond that pays $110 in annual interest- wit.docx(Bond valuation) You own a bond that pays $110 in annual interest- wit.docx
(Bond valuation) You own a bond that pays $110 in annual interest- wit.docxStevenHO9Kellyp
 
Busi 530 week 3 homework 3 solutions new
Busi 530 week 3 homework 3 solutions newBusi 530 week 3 homework 3 solutions new
Busi 530 week 3 homework 3 solutions newmerlincarterr
 

Similar a Applied Math 40S Slides May 9, 2007 - Part 2 (20)

Applied Math 40S Slides May 10, 2007
Applied Math 40S Slides May 10, 2007Applied Math 40S Slides May 10, 2007
Applied Math 40S Slides May 10, 2007
 
You purchase a 7 percent $10,000 bond for $9,400 plus $161 in accr.docx
You purchase a 7 percent $10,000 bond for $9,400 plus $161 in accr.docxYou purchase a 7 percent $10,000 bond for $9,400 plus $161 in accr.docx
You purchase a 7 percent $10,000 bond for $9,400 plus $161 in accr.docx
 
Present value analysis Business Finance homework help.docx
Present value analysis Business Finance homework help.docxPresent value analysis Business Finance homework help.docx
Present value analysis Business Finance homework help.docx
 
Applied Math 40S May 14, 2008
Applied Math 40S May 14, 2008Applied Math 40S May 14, 2008
Applied Math 40S May 14, 2008
 
Applied Math 40S Slides May 11, 2007
Applied Math 40S Slides May 11, 2007Applied Math 40S Slides May 11, 2007
Applied Math 40S Slides May 11, 2007
 
1. If you invest $10,000 at 10 interest, how much will you have in .docx
1. If you invest $10,000 at 10 interest, how much will you have in .docx1. If you invest $10,000 at 10 interest, how much will you have in .docx
1. If you invest $10,000 at 10 interest, how much will you have in .docx
 
Applied Math 40S May 13, 2008
Applied Math 40S May 13, 2008Applied Math 40S May 13, 2008
Applied Math 40S May 13, 2008
 
seo service
seo serviceseo service
seo service
 
Using the Rule of approximate the following.docx
Using the Rule of approximate the following.docxUsing the Rule of approximate the following.docx
Using the Rule of approximate the following.docx
 
A04
A04A04
A04
 
1- Jenelle bought a home for $450-000- paying 10- as a down payment- a.docx
1- Jenelle bought a home for $450-000- paying 10- as a down payment- a.docx1- Jenelle bought a home for $450-000- paying 10- as a down payment- a.docx
1- Jenelle bought a home for $450-000- paying 10- as a down payment- a.docx
 
1. The unpaid balance at the start of a​ 28-day billing cycle was ​$.docx
1. The unpaid balance at the start of a​ 28-day billing cycle was ​$.docx1. The unpaid balance at the start of a​ 28-day billing cycle was ​$.docx
1. The unpaid balance at the start of a​ 28-day billing cycle was ​$.docx
 
1- If a firm paid a dividend of $0 this morning- and the dividend grow.docx
1- If a firm paid a dividend of $0 this morning- and the dividend grow.docx1- If a firm paid a dividend of $0 this morning- and the dividend grow.docx
1- If a firm paid a dividend of $0 this morning- and the dividend grow.docx
 
1.You have $24,435.78 in a brokerage account, and you plan to depo.docx
1.You have $24,435.78 in a brokerage account, and you plan to depo.docx1.You have $24,435.78 in a brokerage account, and you plan to depo.docx
1.You have $24,435.78 in a brokerage account, and you plan to depo.docx
 
1. The factor that affects interest rates isa.            product.pdf
1. The factor that affects interest rates isa.            product.pdf1. The factor that affects interest rates isa.            product.pdf
1. The factor that affects interest rates isa.            product.pdf
 
Week 5 AssignmentQUESTION 4-3An annuity is defined as a s.docx
Week 5 AssignmentQUESTION 4-3An annuity is defined as a s.docxWeek 5 AssignmentQUESTION 4-3An annuity is defined as a s.docx
Week 5 AssignmentQUESTION 4-3An annuity is defined as a s.docx
 
1- A borrower obtains a fully amortizing CPM loan for $125-000 at 6 pe.pdf
1- A borrower obtains a fully amortizing CPM loan for $125-000 at 6 pe.pdf1- A borrower obtains a fully amortizing CPM loan for $125-000 at 6 pe.pdf
1- A borrower obtains a fully amortizing CPM loan for $125-000 at 6 pe.pdf
 
Question 1. You can earn $40 in interest on a $1,000 deposit for.docx
Question 1. You can earn $40 in interest on a $1,000 deposit for.docxQuestion 1. You can earn $40 in interest on a $1,000 deposit for.docx
Question 1. You can earn $40 in interest on a $1,000 deposit for.docx
 
(Bond valuation) You own a bond that pays $110 in annual interest- wit.docx
(Bond valuation) You own a bond that pays $110 in annual interest- wit.docx(Bond valuation) You own a bond that pays $110 in annual interest- wit.docx
(Bond valuation) You own a bond that pays $110 in annual interest- wit.docx
 
Busi 530 week 3 homework 3 solutions new
Busi 530 week 3 homework 3 solutions newBusi 530 week 3 homework 3 solutions new
Busi 530 week 3 homework 3 solutions new
 

Más de Darren Kuropatwa

Providing Permission To Wonder v2.1
Providing Permission To Wonder v2.1Providing Permission To Wonder v2.1
Providing Permission To Wonder v2.1Darren Kuropatwa
 
Things That Suck About Digital Citizenship v1
Things That Suck About Digital Citizenship v1Things That Suck About Digital Citizenship v1
Things That Suck About Digital Citizenship v1Darren Kuropatwa
 
Digital Storytelling for Deeper Learning v1
Digital Storytelling for Deeper Learning v1Digital Storytelling for Deeper Learning v1
Digital Storytelling for Deeper Learning v1Darren Kuropatwa
 
Tales of Learning and the Gifts of Footprints v4.2
Tales of Learning and the Gifts of Footprints v4.2Tales of Learning and the Gifts of Footprints v4.2
Tales of Learning and the Gifts of Footprints v4.2Darren Kuropatwa
 
Making Student Thinking Visible v4
 Making Student Thinking Visible v4 Making Student Thinking Visible v4
Making Student Thinking Visible v4Darren Kuropatwa
 
Leveraging Digital for Deeper Learning
Leveraging Digital for Deeper LearningLeveraging Digital for Deeper Learning
Leveraging Digital for Deeper LearningDarren Kuropatwa
 
We Learn Through Stories at PRIZMAH17
We Learn Through Stories at PRIZMAH17We Learn Through Stories at PRIZMAH17
We Learn Through Stories at PRIZMAH17Darren Kuropatwa
 
Providing Permission to Wonder v3
Providing Permission to Wonder v3Providing Permission to Wonder v3
Providing Permission to Wonder v3Darren Kuropatwa
 
Making Student Thinking Visible v3.7
 Making Student Thinking Visible v3.7 Making Student Thinking Visible v3.7
Making Student Thinking Visible v3.7Darren Kuropatwa
 
Providing Permission to Wonder v2
Providing Permission to Wonder v2Providing Permission to Wonder v2
Providing Permission to Wonder v2Darren Kuropatwa
 
We Learn Through Stories v4 (master class)
We Learn Through Stories v4 (master class)We Learn Through Stories v4 (master class)
We Learn Through Stories v4 (master class)Darren Kuropatwa
 
Deep Learning Design: the middle ring
Deep Learning Design: the middle ringDeep Learning Design: the middle ring
Deep Learning Design: the middle ringDarren Kuropatwa
 

Más de Darren Kuropatwa (20)

Behind Their Eyes v1
Behind Their Eyes v1Behind Their Eyes v1
Behind Their Eyes v1
 
Leading Change v1
Leading Change v1Leading Change v1
Leading Change v1
 
Providing Permission To Wonder v2.1
Providing Permission To Wonder v2.1Providing Permission To Wonder v2.1
Providing Permission To Wonder v2.1
 
Things That Suck About Digital Citizenship v1
Things That Suck About Digital Citizenship v1Things That Suck About Digital Citizenship v1
Things That Suck About Digital Citizenship v1
 
Digital Storytelling for Deeper Learning v1
Digital Storytelling for Deeper Learning v1Digital Storytelling for Deeper Learning v1
Digital Storytelling for Deeper Learning v1
 
Tales of Learning and the Gifts of Footprints v4.2
Tales of Learning and the Gifts of Footprints v4.2Tales of Learning and the Gifts of Footprints v4.2
Tales of Learning and the Gifts of Footprints v4.2
 
The Fourth Screen v4.2
The Fourth Screen v4.2The Fourth Screen v4.2
The Fourth Screen v4.2
 
Making Student Thinking Visible v4
 Making Student Thinking Visible v4 Making Student Thinking Visible v4
Making Student Thinking Visible v4
 
Learning is at BYTE 2017
Learning is at BYTE 2017Learning is at BYTE 2017
Learning is at BYTE 2017
 
Leveraging Digital for Deeper Learning
Leveraging Digital for Deeper LearningLeveraging Digital for Deeper Learning
Leveraging Digital for Deeper Learning
 
We Learn Through Stories at PRIZMAH17
We Learn Through Stories at PRIZMAH17We Learn Through Stories at PRIZMAH17
We Learn Through Stories at PRIZMAH17
 
Providing Permission to Wonder v3
Providing Permission to Wonder v3Providing Permission to Wonder v3
Providing Permission to Wonder v3
 
The Fourth Screen v4.1
The Fourth Screen v4.1The Fourth Screen v4.1
The Fourth Screen v4.1
 
Making Student Thinking Visible v3.7
 Making Student Thinking Visible v3.7 Making Student Thinking Visible v3.7
Making Student Thinking Visible v3.7
 
Learning is at AUHSD
Learning is at AUHSDLearning is at AUHSD
Learning is at AUHSD
 
Providing Permission to Wonder v2
Providing Permission to Wonder v2Providing Permission to Wonder v2
Providing Permission to Wonder v2
 
The Fourth Screen v4
The Fourth Screen v4The Fourth Screen v4
The Fourth Screen v4
 
Learning is at BLC16
Learning is at BLC16Learning is at BLC16
Learning is at BLC16
 
We Learn Through Stories v4 (master class)
We Learn Through Stories v4 (master class)We Learn Through Stories v4 (master class)
We Learn Through Stories v4 (master class)
 
Deep Learning Design: the middle ring
Deep Learning Design: the middle ringDeep Learning Design: the middle ring
Deep Learning Design: the middle ring
 

Último

Stock Market Brief Deck FOR 3142024..pdf
Stock Market Brief Deck FOR 3142024..pdfStock Market Brief Deck FOR 3142024..pdf
Stock Market Brief Deck FOR 3142024..pdfMichael Silva
 
renaltumors upasana sahu Group 50.pptxism
renaltumors upasana sahu Group 50.pptxismrenaltumors upasana sahu Group 50.pptxism
renaltumors upasana sahu Group 50.pptxismthxz2fdqxw
 
Swift_Maintaining Critical Standards(...).pptx.pdf
Swift_Maintaining Critical Standards(...).pptx.pdfSwift_Maintaining Critical Standards(...).pptx.pdf
Swift_Maintaining Critical Standards(...).pptx.pdfNeo4j
 
powerpoint presentation about asian regioonalism
powerpoint presentation about asian regioonalismpowerpoint presentation about asian regioonalism
powerpoint presentation about asian regioonalismrezeraaisla
 
Islamic banking in Afghanistan from start until now
Islamic banking in Afghanistan from start until nowIslamic banking in Afghanistan from start until now
Islamic banking in Afghanistan from start until nowhamidzafar6
 
The Role of Non-Banking Financial Companies (NBFCs).pdf
The Role of Non-Banking Financial Companies (NBFCs).pdfThe Role of Non-Banking Financial Companies (NBFCs).pdf
The Role of Non-Banking Financial Companies (NBFCs).pdfChampak Jhagmag
 
2024.03 Strategic Resources_Pub presentation
2024.03 Strategic Resources_Pub presentation2024.03 Strategic Resources_Pub presentation
2024.03 Strategic Resources_Pub presentationAdnet Communications
 
Buy-Side Leaps Into Gen AI Era by Jasper Colin
Buy-Side Leaps Into Gen AI Era by Jasper ColinBuy-Side Leaps Into Gen AI Era by Jasper Colin
Buy-Side Leaps Into Gen AI Era by Jasper ColinJasper Colin
 
Planning of societal re/production in a commonist society
Planning of societal re/production in a commonist societyPlanning of societal re/production in a commonist society
Planning of societal re/production in a commonist societyStefanMz
 
AUDITING FRAUDS OF AN ENGLISH COMPANY.PPTX
AUDITING FRAUDS OF AN ENGLISH COMPANY.PPTXAUDITING FRAUDS OF AN ENGLISH COMPANY.PPTX
AUDITING FRAUDS OF AN ENGLISH COMPANY.PPTXkamikazekujoh
 
Stock Market Brief Deck FOR 31124 yt.pdf
Stock Market Brief Deck FOR 31124 yt.pdfStock Market Brief Deck FOR 31124 yt.pdf
Stock Market Brief Deck FOR 31124 yt.pdfMichael Silva
 
2024.03 Strategic Resources_Pub (1). pdf
2024.03 Strategic Resources_Pub (1). pdf2024.03 Strategic Resources_Pub (1). pdf
2024.03 Strategic Resources_Pub (1). pdfAdnet Communications
 
14.11.2024 AMOO-MOCA African Creative Economy Summit London summary.pdf
14.11.2024 AMOO-MOCA African Creative Economy Summit London summary.pdf14.11.2024 AMOO-MOCA African Creative Economy Summit London summary.pdf
14.11.2024 AMOO-MOCA African Creative Economy Summit London summary.pdfjamie766122
 
First, Second, and Third Generation Islamic Economicss
First, Second, and Third Generation Islamic EconomicssFirst, Second, and Third Generation Islamic Economicss
First, Second, and Third Generation Islamic EconomicssAsad Zaman
 
Pros and Cons of Interest-Only DSCR Loans
Pros and Cons of Interest-Only DSCR LoansPros and Cons of Interest-Only DSCR Loans
Pros and Cons of Interest-Only DSCR LoansPark Place Finance LLC
 
Economic Risk Factor Update: March 2024 [SlideShare]
Economic Risk Factor Update: March 2024 [SlideShare]Economic Risk Factor Update: March 2024 [SlideShare]
Economic Risk Factor Update: March 2024 [SlideShare]Commonwealth
 
ANALYSIS OF BANK MANDIRI S HEALTH LEVEL BASED ON RISK PROFILE, GOOD CORPORATE...
ANALYSIS OF BANK MANDIRI S HEALTH LEVEL BASED ON RISK PROFILE, GOOD CORPORATE...ANALYSIS OF BANK MANDIRI S HEALTH LEVEL BASED ON RISK PROFILE, GOOD CORPORATE...
ANALYSIS OF BANK MANDIRI S HEALTH LEVEL BASED ON RISK PROFILE, GOOD CORPORATE...indexPub
 
Challenging Factors of Rural Women Entrepreneurs in West Bengal
Challenging Factors of Rural Women Entrepreneurs in West  BengalChallenging Factors of Rural Women Entrepreneurs in West  Bengal
Challenging Factors of Rural Women Entrepreneurs in West BengalNabarun Chakraborty
 
Mytilineos (OW, TP_ €46.0_sh)_ Strong organic progress 14-03-2024.pdf
Mytilineos (OW, TP_ €46.0_sh)_ Strong organic progress 14-03-2024.pdfMytilineos (OW, TP_ €46.0_sh)_ Strong organic progress 14-03-2024.pdf
Mytilineos (OW, TP_ €46.0_sh)_ Strong organic progress 14-03-2024.pdfNewsroom8
 

Último (20)

Stock Market Brief Deck FOR 3142024..pdf
Stock Market Brief Deck FOR 3142024..pdfStock Market Brief Deck FOR 3142024..pdf
Stock Market Brief Deck FOR 3142024..pdf
 
renaltumors upasana sahu Group 50.pptxism
renaltumors upasana sahu Group 50.pptxismrenaltumors upasana sahu Group 50.pptxism
renaltumors upasana sahu Group 50.pptxism
 
Swift_Maintaining Critical Standards(...).pptx.pdf
Swift_Maintaining Critical Standards(...).pptx.pdfSwift_Maintaining Critical Standards(...).pptx.pdf
Swift_Maintaining Critical Standards(...).pptx.pdf
 
powerpoint presentation about asian regioonalism
powerpoint presentation about asian regioonalismpowerpoint presentation about asian regioonalism
powerpoint presentation about asian regioonalism
 
Islamic banking in Afghanistan from start until now
Islamic banking in Afghanistan from start until nowIslamic banking in Afghanistan from start until now
Islamic banking in Afghanistan from start until now
 
The Role of Non-Banking Financial Companies (NBFCs).pdf
The Role of Non-Banking Financial Companies (NBFCs).pdfThe Role of Non-Banking Financial Companies (NBFCs).pdf
The Role of Non-Banking Financial Companies (NBFCs).pdf
 
Closing Remarks International Women's Day 2024
Closing Remarks International Women's Day 2024Closing Remarks International Women's Day 2024
Closing Remarks International Women's Day 2024
 
2024.03 Strategic Resources_Pub presentation
2024.03 Strategic Resources_Pub presentation2024.03 Strategic Resources_Pub presentation
2024.03 Strategic Resources_Pub presentation
 
Buy-Side Leaps Into Gen AI Era by Jasper Colin
Buy-Side Leaps Into Gen AI Era by Jasper ColinBuy-Side Leaps Into Gen AI Era by Jasper Colin
Buy-Side Leaps Into Gen AI Era by Jasper Colin
 
Planning of societal re/production in a commonist society
Planning of societal re/production in a commonist societyPlanning of societal re/production in a commonist society
Planning of societal re/production in a commonist society
 
AUDITING FRAUDS OF AN ENGLISH COMPANY.PPTX
AUDITING FRAUDS OF AN ENGLISH COMPANY.PPTXAUDITING FRAUDS OF AN ENGLISH COMPANY.PPTX
AUDITING FRAUDS OF AN ENGLISH COMPANY.PPTX
 
Stock Market Brief Deck FOR 31124 yt.pdf
Stock Market Brief Deck FOR 31124 yt.pdfStock Market Brief Deck FOR 31124 yt.pdf
Stock Market Brief Deck FOR 31124 yt.pdf
 
2024.03 Strategic Resources_Pub (1). pdf
2024.03 Strategic Resources_Pub (1). pdf2024.03 Strategic Resources_Pub (1). pdf
2024.03 Strategic Resources_Pub (1). pdf
 
14.11.2024 AMOO-MOCA African Creative Economy Summit London summary.pdf
14.11.2024 AMOO-MOCA African Creative Economy Summit London summary.pdf14.11.2024 AMOO-MOCA African Creative Economy Summit London summary.pdf
14.11.2024 AMOO-MOCA African Creative Economy Summit London summary.pdf
 
First, Second, and Third Generation Islamic Economicss
First, Second, and Third Generation Islamic EconomicssFirst, Second, and Third Generation Islamic Economicss
First, Second, and Third Generation Islamic Economicss
 
Pros and Cons of Interest-Only DSCR Loans
Pros and Cons of Interest-Only DSCR LoansPros and Cons of Interest-Only DSCR Loans
Pros and Cons of Interest-Only DSCR Loans
 
Economic Risk Factor Update: March 2024 [SlideShare]
Economic Risk Factor Update: March 2024 [SlideShare]Economic Risk Factor Update: March 2024 [SlideShare]
Economic Risk Factor Update: March 2024 [SlideShare]
 
ANALYSIS OF BANK MANDIRI S HEALTH LEVEL BASED ON RISK PROFILE, GOOD CORPORATE...
ANALYSIS OF BANK MANDIRI S HEALTH LEVEL BASED ON RISK PROFILE, GOOD CORPORATE...ANALYSIS OF BANK MANDIRI S HEALTH LEVEL BASED ON RISK PROFILE, GOOD CORPORATE...
ANALYSIS OF BANK MANDIRI S HEALTH LEVEL BASED ON RISK PROFILE, GOOD CORPORATE...
 
Challenging Factors of Rural Women Entrepreneurs in West Bengal
Challenging Factors of Rural Women Entrepreneurs in West  BengalChallenging Factors of Rural Women Entrepreneurs in West  Bengal
Challenging Factors of Rural Women Entrepreneurs in West Bengal
 
Mytilineos (OW, TP_ €46.0_sh)_ Strong organic progress 14-03-2024.pdf
Mytilineos (OW, TP_ €46.0_sh)_ Strong organic progress 14-03-2024.pdfMytilineos (OW, TP_ €46.0_sh)_ Strong organic progress 14-03-2024.pdf
Mytilineos (OW, TP_ €46.0_sh)_ Strong organic progress 14-03-2024.pdf
 

Applied Math 40S Slides May 9, 2007 - Part 2

  • 1. To my substitute: The student's assignment is in this document on the smart board. They know what to do. Tennyson will help you shut everything down after class. Students should be sitting and working in groups on these problems and collaborating to write the answers on the smart board. I will be verifying their work first thing tomorrow morning. These are wonderful students, sit back and watch them do their thing. ;-) Thanks, Darren Kuropatwa
  • 2. Ms. Johnston has decided to buy a home. She requires a $65 000 mortgage. The mortgage interest rate is 7.75%, and she will repay the mortgage with monthly payments. She needs to decide whether she will select a 20- or 15-year amortization term. How much do her monthly payments increase, and how much money will she save if she chooses a 15-year term instead of a 20-year term? Would you advise Ms. Johnston to get a 15- or 20-year mortgage? Why?
  • 4. T. Bekka needs a $105 000 mortgage which he will repay with monthly payments in 25 years. The first bank he visits offers a mortgage at 8.5%, and the second bank at 7.9%. (a) How much does he save each month if he takes the second offer? (b) How much does he save over the life of the mortgage if he takes the second offer?
  • 6. Rent or Buy? A Case Study ... The Browns have an opportunity to buy a home valued at $50 000 with a down payment of $5000 and a mortgage of $45 000, or rent the home for $525 per month. If they buy, they will get a 15-year mortgage at 7.5%. Annual property taxes are approximately 1.5% of the market value (i.e. the sale price) of the home. They expect their home to appreciate in value by about 2% per year. (That is, it will become 2% MORE VALUABLE each year. If it is worth $100 this year, next year it will be worth $102 and the year after that it would be worth $104.04.) If they rent, their rental payments will increase by 3% each year, and they expect to get a 7% annual return on their investment of the $5000 they did not use as a down payment. Questions on next page ...
  • 7. (a) What is the size of the monthly mortgage payment? (b) What will their equity be in the home after two years of ownership? (c) After one year, how does the cost of payments plus property taxes compare with the cost of rental payments? (d) After 10 years, how does the annual cost of payments plus property taxes compare with the annual cost of rental payments? (e) What might be some reasons for the Brown family to rent instead of buy - even though renting seems to be more expensive in the long run? (f) What is the net cost of owning the home for 10 years? Of renting for 10 years?
  • 9. The Answers ... (1) Savings are: $126,892.80 - $109,312.20 = $17,580.60 Might advise Ms. Johnston to get the 15-year mortgage if she can afford an additional $80 per month mortgage payment because over the life of the mortgage she will save over $17,000, and be free of debts five years sooner. (2) (a) Monthly saving is $40.45 (b) Total saving in 25 years is $12,134.43 (3) (a) $414.23 (b) $8538.72 (c) Renting is more expensive by: $6300.00 - $5720.76 = $579.24 (d) Renting is more expensive by: $8220.12 - $5885.01 = $2335.11 (e) Possible answers: • They do not have enough money for a down payment, or decide to spend the money on something else. • They plan to stay in this home for only a short time. • They have a poor credit rating and cannot get a mortgage. (f) Net Ownership Cost: =Total Costs - Credits = $62,919.89 - $29,271.39 = $33,648.50 Net Rental Cost = $72,222.44 - $4835.76 = $67,386.68 Therefore, $67,386.68 - $33,648.50 = $33,738.18 greater renting than owning.