Excel assignment (see attached file)

Situation:

Part 1—You wish to buy a new house for $250,000. You have the following options for financing:

†Discount points are paid at the time of closing to obtain a lower interest rate. One point equals one percent of the loan amount and will lower the interest rate by about 0.25 percent. This is a one-time payment made when you take out the loan. For example, if you were borrowing $100,000, a typical offer would be to let you pay 1% of the loan amount ($1,000) up front in order to lower your interest rate by 0.25%

For Loans A and C, there is an additional payment of $130 per month for private mortgage insurance (PMI).

You have allocated at most $1800 a month for your house payment (principal, interest, and PMI).

Use a dynamical system to compare the alternatives, choose a loan, and establish your exact monthly payment. In your report, discuss the pros and cons of each loan and include the rationale for your choice of loan. Be sure to address not only the monthly payment, but the total cost of purchasing your home: purchase price, points paid, PMI, and total interest paid.

Part 2—For the Loan option of your choice, what is the effect of paying an additional $200 per month toward the principal? How much will this reduce the total amount of money paid on the house? How long will it take to pay off the mortgage?

Part 3—Suppose, starting at age 25, you put $5500 in a Roth IRA each year. If you invest in mutual funds, you can (historically) average 11% return each year. How much money would you have in the account at age 65? How much could you withdraw per year (starting at age 65) if you wanted the money to last until you were 100 years old?