Assignment Unit07. This is a preview of the draft version of the quiz. Published Preview Edit. Quiz Type. Points. Assignment Group.

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1 Published Preview Edit Assignment Unit07 This is a preview of the draft version of the quiz Quiz Type Points Assignment Group Shuffle Answers Time Limit Multiple Attempts Score to Keep Attempts View Responses Show s One Question at a Time Graded Quiz 30 Assignments No No Time Limit Yes Highest Unlimited Always Immediately No Due For Available from Until Mar 14 Everyone Mar 15 at 11:59pm Take the Quiz Again Score for this attempt: 0 out of 30 Submitted Apr 20 at 11am This attempt took less than 1 minute.

2 Question 1 There are10 questions in this group. For convenience the information is repeated for each question. Calculate the monthly payment for a $60,000 mortgage at 11% interest rate for 30 years. Use EOM. Less than $ Between $ and $ Between $ and $ Between $ and $ More than $ Answer: M= L/PVFS(monthly r=11%/12, n=360months)= 60000/ = Question 2 Calculate the first month interest payment for a $60,000 mortgage at 11% interest rate for 30 years. Less than $ Between $ and $ Between $ and $ Between $ and $575.00

3 More than $ Answer: I = Original loan balance*monthly r = 60000*(11%/12) = 550 Question 3 Calculate the first month principal payment for a $60,000 mortgage at 11% interest rate for 30 years. Less than $15.00 Between $15.00 and $25.00 Between $25.01 and $35.00 Between $35.01 and $45.00 More than $45.00 Answer: P = M I = = Question 4 Calculate the loan balance at the beginning of second month (after one payment) for a $60,000 mortgage at 11% interest rate for 30 years. Less than $59,945.00

4 Between $59, and $59, Between $59, and $59, Between $59, and $59, More than $59, Answer: L1 = L0 P = = Question 5 Calculate the second month interest payment for a $60,000 mortgage at 11% interest rate for 30 years. Less than $ Between $ and $ Between $ and $ Between $ and $ More than $ Answer: I = Loan balance at the beginning of month 2 * monthly r = *(11%/12) =

5 Question 6 Calculate the second month principal payment for a $60,000 mortgage at 11% interest rate for 30 years. Less than $15.00 Between $15.00 and $25.00 Between $25.01 and $35.00 Between $35.01 and $45.00 More than $45.00 Answer: P = M I = = Question 7 Calculate the loan balance at the beginning of the third month (after two payments) for a $60,000 mortgage at 11% interest rate for 30 years. Less than $59, Between $59, and $59, Between $59, and $59, Between $59, and $59, More than $59,955.00

6 Answer: L2 = L1 P = = Question 8 Calculate the third month interest payment for a $60,000 mortgage at 11% interest rate for 30 years. Less than $ Between $ and $ Between $ and $ Between $ and $ More than $ Answer: I = Loan balance at the beginning of month 3 * monthly r = *(11%/12) = Question 9 Calculate the third month principal payment for a $60,000 mortgage at 11% interest rate for 30 years. Less than $15.00 Between $15.00 and $20.00

7 Between $20.01 and $25.00 Between $25.01 and $30.00 More than $30.00 Answer: P = M I = = Question 10 Calculate the loan balance at the beginning of the fourth month (after three payments) for a $60,000 mortgage at 11% interest rate for 30 years. Less than $59, Between $59, and 59, Between $59, and $59, Between $59, and $59, More than $59, Answer: L3 = L2 P = = Question 11

8 If you buy a house of $300,000 with $5,000 of closing costs and 20% down payment, and the market interest rate is 5%, how much is your opportunity cost for this up front housing cost for the first year? Less than $3235 Between $3235 and $3245 Between $3246 and $3255 Between $3256 and $3265 More than $3265 Answer: ( *20%)*5%=3,250 Question 12 Suppose the first year mortgage interest payment is 20,000. Property tax for that year is $3,000. The marginal federal tax rate is 28%, and the marginal state tax rate is 8%. Standard deduction for both federal and state taxes is 10,300. Assuming there is no other items eligible for itemized deduction, what is the tax benefit of homeownership for this year? Less than $4540 Between $4540 and $4550 Between $4551 and $4560 Between $4561 and $4570 More than $4570

9 Answer: Tax benefit=(28%+8%)*(20,000+3,000 10,300)=4,572 Question 13 You purchase a house for $150,000. Six years later you sell the house for $180,000. What is the annual appreciation rate? Less than 2.50% Between 2.50% and 3.50% Between 3.51% and 4.50% Between 4.51% and 5.50% More than 5.50% Answer: Annual appreciation rate = (180,000/150000)^(1/6) 1 =3.09% Question 14 If you buy a house of $1,000,000 with $10,000 of closing costs and 20% down payment, and the market interest rate is 6%, how much is your opportunity cost for this up front housing cost for the first year? Less than $12,595 Between $12,595 and $12,605

10 Between $12,606 and $12,615 Between $12,616 and $12,625 More than $12,625 Answer: (10,000+1,000,000*20%)*6%=12,600 Question 15 Suppose the first year mortgage interest payment is 8,000. Property tax for that year is $3,000. The marginal federal tax rate is 25%, and the marginal state tax rate is 7%. Standard deduction for both federal and state taxes is 10,300. Assuming there is no other items eligible for itemized deduction, what is the tax benefit of homeownership for this year? Less than $200 Between $200 and $210 Between $211 and $220 Between $221 and $230 More than $230 Answer: Tax benefit=(25%+7%)*(8,000+3,000 10,300)=224 Question 16

11 There are 3 questions in this group. For convenience the information is repeated for each question. If you buy a house of $250,000 with a 10% down payment and an 10% mortgage interest rate for a 30 year mortgage, what is your monthly mortgage payment (interest and principal)? Less than $ Between $ and $ Between $ and $ Between $ and $ More than $ Answer: L = *(1 10%)=225,000, M= L/PVFS(monthly r=10%/12, n=360months)= / = Question 17 If you buy a house of $250,000 with a 10% down payment and an 10% mortgage interest rate for a 30 year mortgage, what is your first month interest payment? Less than $ Between $ and $ Between $ and $ Between $ and $ More than $

12 Answer: I = Original loan balance*monthly r = *(10%/12) = Question 18 If you buy a house of $250,000 with a 10% down payment and an10% mortgage interest rate for a 30 year mortgage, what is your first month principal payment? Less than $ Between $ and $ Between $ and $ Between $ and $ More than $ Answer: P = M I = =99.54 Question 19 Which of the following is included in the definition of "shelter"? physical house utilities

13 furnishings household supplies all of the above Question 20 Which of the following is(are) included in the definition of "housing" as opposed to the definition of "shelter"? physical house utilities furnishings household supplies all of the above Question 21 Cost of Living Index compares price over time price in different locations prices in different locations over time

14 Question 22 Suppose Columbus, Ohio has a Cost of Living Index of 102. Which of the following statement is true? The cost of living in Columbus, Ohio is 2% higher than the national average. The cost of living in Columbus, Ohio is 2% lower than the national average. The cost of living in Columbus, Ohio is 20% higher than the national average. The cost of living in Columbus, Ohio is 20% lower than the national average. Question 23 The one time cost of home ownership includes closing cost down payment selling cost all of the above Question 24

15 Which of the following is NOT a one time cost of home ownership? closing cost property tax down payment selling cost Question 25 Which of the following is NOT a periodical cost of home ownership? opportunity cost of down payment and closing cost mortgage principal and interest payment down payment and closing cost property tax Question 26 Which of the following home ownership expenses is NOT tax deductible? mortgage principal payments

16 mortgage interest payments property tax all of the above are tax deductible Question 27 In order to get tax benefits for home ownership, the home owner must file for itemized deduction must file for standard deduction can file for either itemized or standard deduction Question 28 When looking for accurate local home appreciation information, which one of the following is the best source? Housing appreciation tables published by local newspapers on prices of houses sold this year compared to last year. Cost of Living Index published by ACCRA Consumer Price Index published by the Bureau of Labor Statistics Housing Price Index published by the Office of Federal Housing Enterprise Oversight

17 Question 29 You purchase a house for $350,000. Four years later you sell the house for $320,000 at a loss. What is the annual appreciation rate (note this number is going to be negative)? Less than 1.00% Between 1.00% and 0% Between 0.01% and 1.00% Between 1.01% and 2.00% More than 2.00% Answer: Annual appreciation rate = (320,000/350000)^(1/4) 1 = 2.22% Question 30 The housing price index was set to be 100 in 1980 for Utah. In 2014, the index was about 360. What is the annual housing appreciation rate in Utah from 1980 to 2014? below 3% between 3.0% to 5.0% between 5.1% to 7.0% between 7.1% to 9.0%

18 above 9% 100*(1+r)^34=360, r=(360/100)^(1/34) 1=0.0384=3.84% Quiz Score: 0 out of 30