A young graduate wishes to buy a small unit house in a very remote area priced at $190,000.

Get your Assignment in a Minimum of 3 hours

Our academic experts are ready and waiting to assist with any writing project you may have. From simple essay plans, through to full dissertations, you can guarantee we have a service perfectly matched to your needs.

Free Inquiry Order A Paper Now Cost Estimate

A young graduate wishes to buy a small unit house in a very remote area priced at $190,000. They want to borrow the entire amount and repay this amount in full plus interest over the next 20 years. You can offer them a mortgage for the full amount at an interest rate of 17% (sounds like extortion to me) and calls for equal annual installment payments at the end of each of the 20 years.

Required: (a) Calculate the amount of the annual payment?

(b) Create and complete the amortization schedule.

Hint: Use an Excel spreadsheet to create this amortization schedule

Q 2

Consider a bond with a face value of $1000, a coupon rate of 8% (paid annually), and ten years to maturity. What is required of you:

a. What is the price of this bond if the required rate of return (r) is 18 percent?

 b. What is the price if r increases to 20 percent? By what percentage did the price of the bond change?

 c. What is the price if r is five percent? If r increases to seven percent, what is the percentage change in price?

d. From your answers in a to c, what can you say about the relative price volatility of a bond in high compared to low-interest-rate environments?


Save your time - order a paper!

Get your paper written from scratch within the tight deadline. Our service is a reliable solution to all your troubles. Place an order on any task and we will take care of it. You won’t have to worry about the quality and deadlines

Order Paper Now



"Is this question part of your assignment? We Can Help!"

"Our Prices Start at $11.99. As Our First Client, Use Coupon Code GET15 to claim 15% Discount This Month!!"

Get Started