Calculator Problem – 05/05/2014

You find someone that will sell their house for $100,000.  She wants $30,000 at closing and will carry the balance amortized for thirty years at 5%. You create two notes: one for $70,000 for her to keep and another one to sell. You find a note buyer that is happy with an 8% return and will buy the note at closing.  If both notes have the same terms, what will the face amount of the second note need to be?

(The answer will be posted with the new calculator problem in 2 weeks. Or if you can’t wait that long, you can go to https://www.facebook.com/garyjohnstonseminars for the answer.)

Answer for 04/21/2014 problem:

(N=48,PV= -11,250,PMT=345,FV=0) I=20.44%