Michelle took out a $370,000, 30-year, adjustable-rate mortgage with a 2.8$

$$\begin{array}{c|c|c|c|c|c|c} \text{Payment} & \text{Beginning} & \text{Monthly} & \text{Towards} & \text{Towards} & \text{Ending} & \text{Interest}\\ \text { Number } & \text { Balance } & \text { Payment } & \text { Interest } & \text { Principal } & \text { Balance } & \text { Rate } \\ \hline \hline 1 & \$ 370,000.00 & \$ 1,520.31 & \$ 863.33 & \$ 656.98 & \$ 369,343.02 & 2.80 \% \\ 2 & \$ 369,343.02 & \$ 1,520.31 & \$ 861.80 & \$ 658.51 & \$ 368,684.51 & 2.80 \% \\ 3 & \$ 368,684.51 & \$ 1,520.31 & \$ 860.26 & \$ 660.05 & \$ 368,0.24 .46 & 2.80 \% \\ 4 & \$ 368,024.46 & \$ 1,520.31 & \$ 858.72 & \$ 661.59 & \$ 367,362.87 & 2.80 \% \\ 5 & \$ 367,362.87 & \$ 1,520.31 & \$ 857.18 & \$ 663.13 & \$ 366,699.74 & 2.80 \% \\ 6 & \$ 366,699.74 & \$ 1,520.31 & \$ 855.63 & \$ 664.68 & \$ 366,035.06 & 2.80 \% \end{array}$$

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Find the monthly payment for each of these mortgages. Use the table on previous page to help you.

$$\begin{aligned} \begin{array}{lccc} \textbf{Interest Rate} && \textbf{Term} && \textbf{Principal} && \textbf{Payment}\\ 8\% && 20\ \text{years} && \$35,900 && \underline{\qquad \qquad}\\ \end{array} \end{aligned}$$

A bank employs two appraisers. When approving borrowers for mortgages, it is imperative that the appraisers value the same types of properties consistently. To make sure that this is the case, the bank examines six properties (in $\$ 1,000$ s) that the appraisers had valued recently.

$$\begin{aligned} &\begin{array}{|c|c|c|} \hline \text { Property } & \text { Value from Appraiser 1 } & \text { Value from Appraiser 2 } \\ \hline 1 & 235 & 239 \\ \hline 2 & 195 & 190 \\ \hline 3 & 264 & 271 \\ \hline 4 & 315 & 310 \\ \hline 5 & 435 & 437 \\ \hline 6 & 515 & 525 \\ \hline \end{array} \end{aligned}$$

c. Find the $p$-value.

The following data were taken from the financial statements of Gates Inc. for the current fiscal year. Assuming that long-term investments totaled $3,000,000 throughout the year and that total assets were$7,000,000 at the beginning of the current fiscal year, determine the following: rate earned on total assets. Round to one decimal place.

$$\begin{array}{lrrr} \text{Property, plant, and equipment (net)}&&& \$ 3,200,000\\ \text{Liabilities:}\\ \quad\text{Current liabilities}&& \$ 1,000,000\\ \quad\text{Mortgage note payable, 6\\\%, issued 2003, due 2019} &&2,000,000\\ \quad\text{Total liabilities}&&& \$ 3,000,000\\ \text{Stockholders’ equity:}\\ \quad\text{Preferred \$10 stock, \$100 par (no change during year)}&&& \$ 1,000,000\\ \quad\text{Common stock, \$10 par (no change during year)}& && 2,000,000\\ \text{Retained earnings:}\\ \quad\text{Balance, beginning of year}& \$1,570,000\\ \quad\text{Net income}& 930,000 &\$2,500,000\\ \quad\text{Preferred dividends}& \$ 100,000\\ \quad\text{Common dividends}& 400,000 &500,000\\ \quad\text{Balance, end of year}&&& 2,000,000\\ \text{Total stockholders’ equity}&&& \$ 5,000,000\\ \text{Net sales}&&& \$18,900,000\\ \text{Interest expense}&&& \$ 120,000\\ \end{array}$$

For each separate case below, follow the 3 &step process for adjusting the accrued expense account at December 31. Step 1: Determine what the current account balance equals. Step 2: Determine what the current account balance should equal. Step 3: Record the December 31 adjusting entry to get from step 1 to step 2. Assume no other adjusting entries are made during the year. a. Salaries Payable. At year-end, salaries expense of $\$ 15,500$ has been incurred by the company, but is not yet paid to employees. b. Interest Payable. At its December 31 year-end, the company owes $\$ 250$ of interest on a line-of-credit loan. That interest will not be paid until sometime in January of the next year. c. Interest Payable. At its December 31 year-end, the company holds a mortgage payable that has incurred $\$ 875$ in annual interest that is neither recorded nor paid. The company intends to pay the interest on January 7 of the next year.

$$\begin{array}{c} \textbf{MONTHLY PAYMENT FOR A \$1000 LOAN}\\ \hline \end{array}$$

$$\begin{array}{c c} \textbf{Annual} & \textbf{Length of Loan (Years)}\\ \textbf{Interest} & \\ \textbf{Rate} & \\ \end{array}$$

$$\begin{array}{c c c c} & \textbf{\hspace{45pt}20} & \textbf{\hspace{15pt}25} & \textbf{\hspace{15pt} 30} \\ \end{array}$$

$$\begin{array}{l r r r} 10.00 \% & \$ ~~~9.66 & \$ ~~~9.09 & \$~~~8.78\\ 10.50\% & 9.99 & 9.45 & 9.15 \\ 11.00\% & 10.33 & 9.81 & 9.53 \\ 11.50\% & 10.67 & 10.17 & 9.91 \\ 12.00\% & 11.02 & 10.54& 10.29\\ 12.50\% & 11.37 & 10.91& 10.68\\ 13.00\% & 11.72 & 11.28& 11.07\\ 13.50\% & 12.08& 11.66& 11.46 \end{array}$$

Use the table above to solve.

$$\begin{array}{|l |c|} \hline \textbf{Mortgage} & \$95,000\\ \hline \textbf{Years} & 30\\ \hline \textbf{Rate} & 11.50\%\\ \hline \textbf{Payment} & ? \\ \hline \textbf{Amount Paid} & ? \\ \hline \textbf{Total Interest} & ?\\ \hline \end{array}$$

A Snapshot in USA Today shows that 60% of consumers say they have become more conservative spenders. When asked "What would you do first if you won $1 million tomorrow? the answers had to do with somewhat conservative measures like "hire a financial adviser" or "pay off my credit card," or "pay off my mortgage." Suppose a random sample of n=15 customers is selected and the number x of those who say that they have become more conservative spenders are recorded. a. What is the probability that more than six consumers say that they have become more conservative spenders? b. What is the probability that fewer than five of those sampled have become conservative spenders? c. What is the probability that exactly nine of those sample now conservative spenders?

Tom took out a $440,000, 15-year adjustable rate mortgage with a 2.85$

$$\begin{array}{|c|c|c|c|c|c|} \hline \begin{array}{c} \text { Payment } \\ \text { Number } \end{array} & \begin{array}{c} \text { Beginning } \\ \text { Balance } \end{array} & \begin{array}{c} \text { Monthly } \\ \text { Payment } \end{array} & \begin{array}{c} \text { Towards } \\ \text { Interest } \end{array} & \begin{array}{c} \text { Towards } \\ \text { Principal } \end{array} & \begin{array}{c} \text { Ending } \\ \text { Balance } \end{array} \\ \hline 1 & \$ 440,000.00 & \$ 3,006.92 & \$ 1,045.00 & \$ 1,961.92 & \$ 438,038.08 \\ 2 & \$ 438,038.00 & \$ 3,006.92 & \$ 1,040.34 & \$ 1,966.58 & \$ 436,071.50 \\ \hline 3 & \$ 436,071.50 & \$ 3,006.92 & \$ 1,035.67 & \$ 1,971.25 & \$ 434,100.26 \\ 4 & \$ 434,100.26 & \$ 3,006.92 & \$ 1,030.99 & \$ 1,975.93 & \$ 432,124.33 \\ \hline 5 & \$ 432,124.33 & \$ 3,006.92 & \$ 1,026.30 & \$ 1,980.62 & \$ 430,143.71 \\ 6 & \$ 430,143.71 & \$ 3,006.92 & \$ 1,021.59 & \$ 1,985.33 & \$ 428,158.38 \\ \hline \end{array}$$

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For each separate case below, follow the three-step process for adjusting the accrued expense account at December 31. Step 1: Determine what the current account balance equals. Step 2: Determine what the current account balance should equal. Step 3: Record the December 31 adjusting entry to get from step 1 to step 2. Assume no other adjusting entries are made during the year. a. Salaries Payable. At year-end, salaries expense of $15,500 has been incurred by the company but is not yet paid to employees. b. Interest Payable. At its December 31 year-end, the company owes$250 of interest on a line-of-credit loan. That interest will not be paid until sometime in January of the next year. c. Interest Payable. At its December 31 year-end, the company holds a mortgage payable that has incurred $875 in annual interest that is neither recorded nor paid. The company intends to pay the interest on January 7 of the next year.

Find the monthly payment for each of these mortgages. Use the table on previous page to help you.

$$\begin{aligned} \begin{array}{lccc} \textbf{Interest Rate} && \textbf{Term} && \textbf{Principal} && \textbf{Payment}\\ 12\% && 35\ \text{years} && \$45,900 && \underline{\qquad \qquad}\\ \end{array} \end{aligned}$$

Find the monthly payment for each of these mortgages. Use the table on previous page to help you.

$$\begin{aligned} \begin{array}{lccc} \textbf{Interest Rate} && \textbf{Term} && \textbf{Principal} && \textbf{Payment}\\ 7\% && 30\ \text{years} && \$45,000 && \underline{\qquad \qquad}\\ \end{array} \end{aligned}$$

$$\begin{array}{c} \textbf{MONTHLY PAYMENT FOR A \$1000 LOAN}\\ \hline \end{array}$$

$$\begin{array}{c c} \textbf{Annual} & \textbf{Length of Loan (Years)}\\ \textbf{Interest} & \\ \textbf{Rate} & \\ \end{array}$$

$$\begin{array}{c c c c} & \textbf{\hspace{45pt}20} & \textbf{\hspace{15pt}25} & \textbf{\hspace{15pt} 30} \\ \end{array}$$

$$\begin{array}{l r r r} 10.00 \% & \$ ~~~9.66 & \$ ~~~9.09 & \$~~~8.78\\ 10.50\% & 9.99 & 9.45 & 9.15 \\ 11.00\% & 10.33 & 9.81 & 9.53 \\ 11.50\% & 10.67 & 10.17 & 9.91 \\ 12.00\% & 11.02 & 10.54& 10.29\\ 12.50\% & 11.37 & 10.91& 10.68\\ 13.00\% & 11.72 & 11.28& 11.07\\ 13.50\% & 12.08& 11.66& 11.46 \end{array}$$

Use the table above to solve.

$$\begin{array}{|l |c|} \hline \textbf{Mortgage} & \$225,000\\ \hline \textbf{Years} & 20\\ \hline \textbf{Rate} & 13.00\%\\ \hline \textbf{Payment} & ? \\ \hline \textbf{Amount Paid} & ? \\ \hline \textbf{Total Interest} & ?\\ \hline \end{array}$$

Examine the following loan amortization table for the first 5 months of a $475,000, 25-year mortgage with an APR of 5.45$

$$\begin{array}{|c|c|c|c|c|c|} \hline \begin{array}{c} \text { Payment } \\ \text { Number } \end{array} & \begin{array}{c} \text { Beginning } \\ \text { Balance } \end{array} & \begin{array}{c} \text { Monthly } \\ \text { Payment } \end{array} & \begin{array}{c} \text { Toward } \\ \text { Interest } \end{array} & \begin{array}{c} \text { Toward } \\ \text { Principal } \end{array} & \begin{array}{c} \text { Ending } \\ \text { Balance } \end{array} \\ \hline 1 & 475,000.00 & & 2,157.29 & 745.46 & 474,254.54 \\ \hline 2 & & & 2,153.91 & 748.84 & 473,505.70 \\ \hline 3 & 473,505.70 & & & 752.24 & 472,753.45 \\ \hline 4 & 472,753.45 & & 2,147.09 & & 471,997.79 \\ \hline 5 & 471,997.79 & & 2,143.66 & 759.09 & \\ \hline 6 & 471,238.70 & & & 762.54 & 470,476.16 \\ \hline \end{array}$$

$

The amount of money used to pay for housing is a significant factor in the cost of living. For homeowners, the overall cost of living may include mortgage payments, property taxes, and utility expenditures (water, heat, electricity). An economist chose 20 New England homeowners as a sample, and then determined the entire cost of housing as a percentage of monthly income five years ago and now. The data is presented below. Is it acceptable to assume that the percentage has decreased from five years ago?

$$\begin{array}{lcc} \text { Homeowner } & \text { Five Years Ago } & \text { Now } \\ \hline \text { Holt } & 17 \% & 10 \% \\ \text { Pierse } & 20 & 39 \\ \text { Merenick } & 29 & 37 \\ \text { Lanoue } & 43 & 27 \\ \text { Fagan } & 36 & 12 \\ \text { Bobko } & 43 & 41 \\ \text { Kippert } & 45 & 24 \\ \text { San Roman } & 19 & 26 \\ \text { Kurimsky } & 49 & 28 \\ \text { Davison } & 49 & 26 \end{array}$$

$$\begin{array}{lcl} \text { Homeowner } & \text { Five Years Ago } & \text { Now } \\ \hline \text { Lozier } & 35 \% & 32 \% \\ \text { Cieslinski } & 16 & 32 \\ \text { Rowatti } & 23 & 21 \\ \text { Koppel } & 33 & 12 \\ \text { Rumsey } & 44 & 40 \\ \text { McGinnis } & 44 & 42 \\ \text { Pierce } & 28 & 22 \\ \text { Roll } & 29 & 19 \\ \text { Lang } & 39 & 35 \\ \text { Miller } & 22 & 12 \end{array}$$