Home loans
Question
Two more question I am stuck on. I can’t figure out how to complete in Excel. Here they are:Home loans
typically involve “points,” which are fees charged by the lender. Each point charged means that the borrower must pay 1% of the loan amount as a fee. For example, if the loan is for $190,000 and 3 points are charged, the loan repayment schedule is calculated on a $190,000 loan but the net amount the borrower receives is only $184,300. Assume the interest rate is 1.25% per month. What is the effective annual interest rate charged on such a loan, assuming loan repayment occurs over 132 months? (Do not round intermediate calculations. Enter your answer as a percent rounded to 2 decimal places. Use a financial calculator or Excel.)
Next Question:
| A couple will retire in 50 years; they plan to spend about $24,000 a year in retirement, which should last about 25 years. They believe that they can earn 7% interest on retirement savings. |
| a. | If they make annual payments into a savings plan, how much will they need to save each year? Assume the first payment comes in 1 year. (Do not round intermediate calculations. Round your answer to 2 decimal places.) |
| Annual payment | $ |
| b. | How would the answer to part (a) change if the couple also realize that in 20 years they will need to spend $54,000 on their child’s college education? (Do not round intermediate calculations. Round your answer to 2 decimal places.) |
| Annual payment | $ |
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