Chapter 18
Problem 03
Input Area:
$ Line of credit 75,000
First mortgage 180,000
Second mortgage 25,000
Appraised value 400,000
Output Area:
% Of homes estimated market value 70.00%
Chapter 18
Problem 07
Input Area:
Points Percentage # of accounts
Average size per
account
<=40 pts deliquent 30.00% 7,665 6,200
<= 40 pts success 12.00% 3,066 1,000
Output Area:
Savings in net losses 44,457,000.00
Chapter 18
Problem 08
Input Area:
Estimated market value $395,000.00
Max loan-to-value ratio 75.00%
Existing loans outstanding $235,000.00
Output Area:
Max credit available on home-equity line $61,250.00
Chapter 18
Problem 10
Input Area:
$ Amount of the loan $50,000.00
Prime rate Currently 4.25%
Mark-up from prime 2.00%
Output Area:
Interest rate charged 6.25%
Net proceeds of discount loan $46,875.00
Effective interest rate 6.67%
Chapter 18
Problem 11
Input Area:
Length of mortgage (yrs) 30
Amount borrowed $325,000
Interest rate (annual) 5.25%
Output Area:
Number of months 360
Periodic rate 0.44%
monthly pmts $1,794.66
Chapter 18
Problem 12
Input Area:
Payments
Made Total
1 1
2 2
3 3
4 4
5 5
6 6
7 7
8 8
9 9
10
11
12
Output Area:
Percentage rebate of finance charges 57.69%
Percentage lender is entitled to keep 42.31%
Chapter 18
Problem 13
Input Area:
$ Amount of Vacation Loan $8,000
# of monthly installment pmts 12
Add-on interest rate 5.75%
Output Area:
$ Amount of interest paid $460.00
$ Amount of each payment $705.00
Effective rate on loan 11.50%
Chapter 18
Problem 14
Input Area:
$ Amount of Automobile loan $39,000.00
# of monthly pmts 60
Total finance charges $5,500.00
Output Area:
Monthly pmt $741.67
Periodic (monthly) interest rate 0.44%
APR 5.32%
Chapter 18
Problem 15
Input Area:
Term of mortgage (years) 25
Purchase Price $465,000.00
$ Amount borrowed $395,000.00
APR 5.50%
Output Area:
Monthly pmt $2,425.65
Total finance charges paid over life of loan $332,693.68
Chapter 18
Problem 16
Input Area:
Alternative 1: Qtly Payts
$ Amount of loan 1,600.00
$ Principal installment payments 400.00
Annual simple interest rate 6.00%
Alternative 2: Pay all in 1 yr
$ Amount of loan 1,600.00
Annual simple interest rate 5.00%
Output Area:
Alternative 1: Qtly Payts
Interest paid for first quarter 24.00
Interest paid for second quarter 18.00
Interest paid for third quarter 12.00
Interest paid for fourth quarter 6.00
Total interest paid over the year 60.00
Alternative 2: Pay all in 1 yr
Interest paid 80.00
Chapter 18
Problem 17
Input Area:
$ Amount borrowed 300,000
Points assessed on loan in percentage terms 0.50%
Output Area:
$ Value of points 1,500.00
$Credit available for use 298,500.00
Chapter 18
Problem 18
Input Area:
Loan Amount $100.00
$ finance charge for each $100.00 borrowed $3.75
Number of monthly installments 12
Early retirement of loan (number of months) 6
Output Area:
Monthly pmt $8.65
Periodic (monthly) rate 0.57%
APR 6.85%
Value of loan when retired $50.85
Total $s paid out at early retirement $102.73
Amount of finance charges paid $2.73
$ Amount of finance charges saved $1.02