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a) (10 points) Using the two links below, figure out the monthly payments on a
$100,000, 30 year mortgage loan on April 1971 and compare to the monthly
payment on May 2014.
What is the relationship between the interest rate and the
fixed monthly payment (be specific)? Hint, on the Bank Rate site, enter $100,000
as the mortgage amount, 30 years as the term in years, and the relevant interest
rate (take to two decimal places), then click on calculate.
Bank Rate site:
http://www.bankrate.com/calculators/mortgages/mortgage-paymentcalculator.aspx
30 mortgage rates:
http://research.stlouisfed.org/fred2/series/MORTG
(click on ‘view data’ on upper left of screen)
fixed monthly payment (be specific)? Hint, on the Bank Rate site, enter $100,000
as the mortgage amount, 30 years as the term in years, and the relevant interest
rate (take to two decimal places), then click on calculate.
Bank Rate site:
http://www.bankrate.com/calculators/mortgages/mortgage-paymentcalculator.aspx
30 mortgage rates:
http://research.stlouisfed.org/fred2/series/MORTG
(click on ‘view data’ on upper left of screen)
b) (5 points) What is the percent difference in monthly payments?
c) (5 points) Now compare the total interest payments using May 2014 vs. April
1971.
1971.
d) (5 points) Using an interest rate = 5%, compare the present value of $100,000 one
year from now to the present value of $100,000 five years from now.
year from now to the present value of $100,000 five years from now.
ScholarMatic: Explanation & Answer
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