finance tutor 1
Running Head: FINANCE
Financial Crisis
Walter Frazier
FIN 100
Professor Fatma Ahmad
January 22, 2017
Unfortunately, due to rapidly rising housing prices during the decade prior to 2006, many home buyers needed increasingly larger loans to make their real property purchases. For example, a $200,000 fixed-rate mortgage loan would result in a much higher monthly payment compared to a $100,000 loan. Rework the above financial calculator spread sheet solutions using a PV of – 200000. The resulting doubling of the monthly payment to $1,199.10 means that fewer potential home buyers could qualify for these larger loans.
P6
FV = PV * (1+r)^n;
5000 = PV * (1+0.05)^10; 5000 = PV * (1.05)^10; PV = 5000/((1.05)^10); PV = $3,069.57
5000 = PV * (1+0.07)^7; 5000 = PV * (1.07)^7; PV = 5000/((1.07)^7); PV = $3,113.75
5000 = PV * (1+0.09)^4; 5000 = PV * (1.09)^7; PV = 5000/((1.09)^4); PV = $3,542.13
P9
FV = PV * (1+r*n);
FV = 5000 * (1+0.1*5); FV = 5000 * 1.5; FV = $7,500
P10
PV = FV/((1+r)^n)
PV = 3000/((1+0.04)^1); PV = 3000/1.04; PV = $2,884.62
PV = 3000/((1+0.04)^2); PV = 3000/1.04; PV = $2.773.67
P11
PV = FV/((1+r)^n)
PV = 3000 *
P12
Monthly payments = $11122.22; annual payment = $133,466.64
P13
Monthly payments = $380.44; annual payments = $4,565.28
P15
85*8 + 1000 = $1,680; PV = 1680/((1+0.085)^8); PV = $874.72
PV = 1680/((1+0.1)^8) = $783.73
PV = 1680/((1+0.08)^8) = $907.65