Logo
Home Study Material Contact Search
AI Chat FREE
  1. business
  2. finance
  3. forty-eight (48) months ago, james alfred charles

Forty-eight (48) months ago, James Alfred Charles purchased a $2,750,000 house in Buckhead with no money...

70.2K

Verified Solution

Question

Finance

Forty-eight (48) months ago, James Alfred Charles purchased a$2,750,000 house in Buckhead with no money down (i.e. he borrowed$2,750,000). The interest rate on his 30-year, monthly payment loanwas 6.25 percent. For the first 48 months of the loan, James paidtwice the normal required payment (for example, if the requiredpayment to pay off the loan in 30 years was $4000 per month, Jamesactually paid $8000 per month, with all excess being appliedagainst the principle balance). Now, James is thinking aboutdownsizing and he would like to know how much equity he hasaccumulated in his home. Unfortunately, the market value of hishome has depreciated by 30 percent over the past 4 years (thus,James can only sell his house today for $1,925,000). Assuming thatJames made all of his monthly payments (i.e., twice the requiredamount) on time and assuming that he can sell his house today(i.e., immediately after making his 48th monthly payment) for$1,925,000, how much equity can James Alfred Charles expect to takeout of his home? (Note: for this problem, to achieve as precise ananswer as possible, round all intermediate calculations – payment,interest rate, N, etc. to a minimum of 4 decimal places).

Answer & Explanation Solved by verified expert
4.1 Ratings (497 Votes)
The normal payment will be PMT62512 360 2750000 169322230 So Alfred makes a monthly payment of 1693222302 338644460 each month for 48 months At the end of 48 months the following balances will be left Month Loan balance at start of the month Monthly payment Interest Loan balance at end of the month 1 27500000000 338644460 143229167 27304584706 2 27304584706 338644460 142211379 27108151625 3 27108151625 338644460 141188290 26910695454 4 26910695454 338644460 140159872 26712210866 5 26712210866 338644460 139126098    See Answer
Get Answers to Unlimited Questions

Join us to gain access to millions of questions and expert answers. Enjoy exclusive benefits tailored just for you!

Membership Benefits:
  • Unlimited Question Access with detailed Answers
  • Zin AI - 3 Million Words
  • 10 Dall-E 3 Images
  • 20 Plot Generations
  • Conversation with Dialogue Memory
  • No Ads, Ever!
  • Access to Our Best AI Platform: Flex AI - Your personal assistant for all your inquiries!
Become a Member

Other questions asked by students

Q

A paleontologist examines 39 skeletons of a new species of dinosaur and finds that the average...

Statistics
Q

The outer covering of an adult sea squirt is called the . mantle exoskeleton shell tunic Why are sponges considered...

Biology
Q

Answer as most as possible I want to understand it all 1. Union Local School District...

Finance
Q

A company issues term bonds totaling $300,000 on January 1, 2014. The bonds have a coupon...

Accounting
Q

1 A circle 2 An ellipse 3 A straight line 4 A parabola A S...

Physics
Q

Swiss Supplies showed the following selected adjusted balances at its December 31,2022, year-end:...

Accounting
Q

The Consumer Division of Lewandowski Company has income from operations of $82,740 and assets of...

Accounting
Q

Calculate the book value of a three-year-old machine that cost $320,000, has an estimated residual...

Accounting
Q

Leonard recorded gross pay of $250,000. This is subject to employee's portion of social security...

Accounting
Q

ANSWER THE WHOLE QUESTION CIRCLE AND WRITE OUT THE ANSWER Meredith Company has...

Accounting
Q

5. Process Cost 25 points Karim-Savage Petroleum Inc. produces petroleum as part of a continuous...

Accounting
Q

You have just been hired as a financial analyst for Barrington Industries. Unfortunately, company headquarters...

Finance