MATH 5- HOMEWORK

GOBC Real Estate • Mortgage Notes

• PIMP
• PIMPO

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 MATH CLASS 5- HOMEWORK
Homework MATH 5:
1. Practice questions: ALL PIMP pages 74-78
2. Watch the videos for the next class (Math class 6)

MARKET VALUE OF THE OFFER/ MORTGAGE (PIMP):_______________________________________________________

13. Mike bought a house one year ago at which time he arranged a $340,000 mortgage. This loan was written at a nominal rate
of 2.5% per annum, compounded semi-annually with a 25-year term and amortization period, and monthly payments. Today
Mike has received an offer from Andre to buy his house for $50,000 cash plus assumption of his mortgage. If current mortgage
rates for similar mortgages are 3% per annum, compounded semi-annually, what is the market value of Andre's offer?

(1) $371,861.79
(2) $321,861.79
(3) $363,037.97
(4) $313,037.97

14. Susan Jones has offered to purchase a house from a vendor who is willing to provide partial financing. Her offer is a
$75,000 down payment plus a mortgage of $125,000 at 14% per annum, compounded semiannually. The loan is to be fully
amortized with level monthly payments over twenty years. What is the market value of this offer if the market rate for similar
mortgage loans is 22% per annum, compounded semiannually?

(1) $160,241.41
(2) $258,303.50
(3) $85,241.41
(4) $167,769.22

15. Mary Smith has offered to purchase a house from a seller who is willing to provide partial financing. Her offer is a $75,000
down payment plus a mortgage of $125,000 at 4% per annum, compounded semi-annually. The loan is to be fully amortized
with monthly payments of $755.31 over 20 years. If the market rate for similar mortgage loans is 7.5% per annum,
compounded semi-annually, what is the market value of this offer, rounded to the nearest dollar?

(1) $169,579
(2) $108,618
(3) $94,579
(4) $183,618

16. Steve Johnson purchased a home 2 years ago, at which time he arranged for a mortgage in the amount of $175,000
amortized over 20 years with a 5-year term and monthly payments. The interest rate on the mortgage was 15% per annum,
compounded quarterly. Steve has just received an offer on his house from Linda. Linda's offer consists of $45,000 cash and
assumption of the loan for the remainder of the term. If the current market rate for similar mortgages is 12.5% per annum,
compounded quarterly, what is the market value of Linda's offer?
(1) $226,959.46
(2) $235,524.31
(3) $181,523.59
(4) $247,343.10

©2022 GOBC Training Ltd Answers: 13(3), 14(1), 15(1), 16(1) 74

 MATH CLASS 5- HOMEWORK
17. Johnson purchased a home two years ago, at which time he arranged for a mortgage in the amount of $175,000 amortized
over 20 years with a 5-year term and monthly payments. The interest rate on the mortgage was 7% per annum, compounded
monthly, calling for monthly payments of $1,356.78 and an outstanding balance of $150,948.60 due at the end of the 5-year
term. Steve has just received an offer on his house from Linda. Linda's offer consists of $45,000 cash and assumption of the
existing mortgage for the remainder of the term. If current market rates for 3-year term mortgages are 5% per annum,
compounded monthly, what is the market value of Linda's offer?
(1) $220,233.07
(2) $254,367.37
(3) $237,989.28
(4) $243,966.11

18. Susan Jones has offered to purchase a house from a vendor who is willing to provide partial financing. Her offer is a
$75,000 down payment plus a mortgage of $125,000 at 4% per annum, compounded semi-annually. The loan is to be fully
amortized with monthly payments over 20 years. What is the market value of this offer if the market rate for similar mortgage
loans is 6.5% per annum, compounded semi-annually?
(1) $113,009.30
(2) $188,009.30
(3) $101,994.94
(4) $176,999.94

19. An offer of $235,000 is accepted, comprised of a cash down payment of $85,000 and a vendor supplied mortgage loan of
$150,000 at 14% per annum, compounded semi-annually. The loan has an amortization period of 25 years, a term of 5 years
and calls for monthly payments. Market rates of interest for equivalent mortgages are currently 19% per annum, compounded
semi-annually. Mortgage payments are to be rounded up to the next higher dollar. The market value of the mortgage will be:

(1) $127,385.13
(2) $199,309.79
(3) $235,000.00
(4) $212,385.13

20. A developer is offering a mortgage loan of $102,000 at 19.5% per annum, compounded semi-annually, on each of sixteen
units in a condominium development. The mortgages have monthly payments, five-year terms and twenty-year amortization
periods. Each unit is priced at $130,000 and the units have been selling over the past seven months. Even with a recent
decrease in interest rates (currently at J2 = 18%), the property has attracted the attention of a purchaser who has made a full
price offer, and applied for the developer's financing on one of the condominium units. The market value of the offer is:

(1) $134,661.86
(2) $132,975.17
(3) $130,000.00
(4) $106,661.86

©2022 GOBC Training Ltd Answers: 17(1), 18(4), 19(1), 20(1) 75

 MATH CLASS 5- HOMEWORK
21. A developer is offering a mortgage loan of $102,000 at 5% per annum, compounded semi-annually, on each of 16 units in a
condominium development. The mortgages have monthly payments, 5-year terms, and 20-year amortization periods. Each
unit is priced at $130,000 and the units have been selling over the past seven months. Even with a recent decrease in interest
rates (currently at J2 = 4%), the property has attracted the attention of a buyer who has made a full price offer, and applied for
the developer's financing on one of the condominium units. The market value of the offer is:

(1) $134,191.60
(2) $132,975.00
(3) $130,000.00
(4) $106,191.60

22. Jim Dickson is interested in purchasing Josephine Topanga's condominium for the listed price of $250,000. Jim proposes to
pay $80,000 in cash and he wants Josephine to take back a mortgage for the balance. The rate on the suggested mortgage is
J2 = 15% and the loan is to be fully amortized with monthly payments over 20 years. The market rate for similar mortgages is
J2 = 18%. What is the market value of Jim's offer?
(1) $226,057.65
(2) $146,057.65
(3) $189,057.65
(4) $316,057.65

23. Three years ago Jim bought a house at which time he arranged a mortgage in the amount of $120,000. The loan was
written at a rate of 9.75% per annum compounded semi-annually, with a 5-year term, 25 year amortization period and
monthly payments. Jim has just received an offer from Alice to buy his house. Alice offers to provide $25,000 cash and to
assume the existing financing for the remainder of the term. If current lending rates for 2-year term mortgages are 11.75% per
annum, compounded semi-annually, what is the market value of Alice's offer?
(1) $111,508.31
(2) $112,055.09
(3) $150,000.00
(4) $137,055.09

24. Three years ago Larry bought a house at which time he arranged a mortgage for $240,000. The loan was written at a rate of
5.75% per annum compounded semi-annually, calling for monthly payments of $1,500.06 and an outstanding balance of
$214,837.74 due at the end of the 5-year term. Larry has just received an offer from Mary to buy his house. Mary's offer
consists of $50,000 cash and assumption of the existing financing for the remainder of the term. If current lending rates for 2-
year term mortgages are 8% per annum, compounded semi-annually, what is the market value of Mary's offer?
(1) $238,005.91
(2) $266,854.92
(3) $290,000.00
(4) $219,345.07

25. A mortgage broker will advance $97,000 to a borrower who has agreed to pay a bonus of $2,200. As a consequence, the
face value of the loan will be $99,200. The loan will be amortized over 25 years with monthly payments at J2 = 16%. Calculate
the monthly payment required to amortize the loan.

(1) $1,279.50
(2) $1,308.52
(3) $1,348.02
(4) $1,318.13

©2022 GOBC Training Ltd

Answers: 21(1), 22(1), 23(4), 24(2), 25(2), 76
 MATH CLASS 5- HOMEWORK
26. Alex Dupuis wants to purchase Joe Benardo's property. Alex would like to pay $35,000 in cash and take over the existing
mortgage which has an outstanding balance of $75,000 and calls for 208 more monthly payments. The interest rate on the
mortgage is J2 = 15%, but the market rate is J2 = 12%. What is the market value of the offer?

(1) $110,000.00
(2) $88,006.20
(3) $99,842.69
(4) $123,006.20

27 Alex Dupuis wants to purchase Joe Benardo's property. Alex would like to pay $35,000 in cash and take over the existing
mortgage which has 233 monthly payments of $900 remaining on the mortgage loan. The interest rate on the original
mortgage is J2 = 9%, but the current market rate is J2 = 6%. What is the market value of the offer?

(1) $100,000.00
(2) $123,690.70
(3) $145,223.67
(4) $159,410.89

28. A developer is offering a mortgage loan of $102,000 at 19.25% per annum, compounded semi-annually, on each of sixteen
units in a condominium development. The mortgages have monthly payments, a five-year term and twenty-year amortization
periods. Each unit is priced at $132,000 and the units have been selling over the past seven months. Even with a recent
decrease in interest rates (currently at J2 = 18%), the property has attracted the attention of a purchaser who has made a full
price offer, and applied for the developer's financing on one of the condominium units. The market value of the offer is:

(1) $135,885.12
(2) $132,975.17
(3) $130,000.00
(4) $105,885.12

29. Accurate Appraiser is valuing a townhouse using the market comparison approach. A house recently sold for $175,000,
comprised of $85,000 cash and a $90,000 vendor take-back mortgage written at 15% per annum, compounded semi-annually,
with monthly payments sufficient to amortize the loan over 25 years and with a term of 5 years. At the time that the house
sold, the market rate for similar mortgages was 17% per annum, compounded semi-annually. What price should Accurate
Appraiser use if this sale is to be used as a comparable?

(1) $175,000.00
(2) $165,540.35
(3) $84,330.13
(4) $169,330.13

30. Accurate Appraiser is valuing a townhouse using the direct comparison approach. A house recently sold for $175,000,
comprised of $85,000 cash and a $90,000 vendor-supplied mortgage written at 5% per annum, compounded semi-annually,
with monthly payments sufficient to amortize the loan over 25 years and with a term of 5 years. At the time that the house
sold, the market rate for similar mortgages was 7% per annum, compounded semi-annually. What price should Accurate
Appraiser use if this sale is to be used as a comparable? Round your answer to the nearest $10.

(1) $175,000
(2) $159,730
(3) $82,630
(4) $167,970

©2022 GOBC Training Ltd Answers: 26(4), 27(4), 28(1), 29(4), 30(4) 77
 MATH CLASS 5- HOMEWORK

31. Sara wants to purchase Bart's property. Sara would like to pay $50,000 in cash and take over the existing mortgage which
has 233 monthly payments of $1,050 remaining on the mortgage. The interest rate on the original mortgage is J2 = 8%, but the
current market rate is J2 = 5.5%. What is the market value of the offer?

(1) $244,650.00
(2) $200,903.78
(3) $180,322.00
(4) $150,154.54

32. Two years ago, Erma bought a beautiful lakefront estate for $750,000. She made the purchase with a $250,000 down
payment and financed the remainder with a mortgage loan written at a contract rate of J2 =7.5%, calling for monthly payments
of $3,994 and an outstanding balance of $433,709.14 due at the end of the 5-year term. Ernie has made an offer of a $240,000
down payment and assumption of the existing financing for the remainder of the term. If the current market interest rates for
3-year term mortgages is J1= 10%, what is the market value of Ernie's offer?

(1) $690,410.81
(2) $526,899.31
(3) $650,783.33
(4) $685,478.28

33. Mr. Dunigan has agreed to sell his prime Vancouver home to his friend Mr. Flutie. Mr. Flutie's offer consists of $55,000 cash
and financing the remainder by way of a vendor take-back mortgage. The vendor take-back mortgage would be written for
$375,000 at 11.75% per annum, compounded semi-annually and has an amortization period of 25 years, a term of 5 years and
monthly payments. Market rates of interest for equivalent mortgages are currently 13% per annum, compounded semi-
annually. What will be the market value of Flutie's offer?

(1) $588,804.16
(2) $358,848.90
(3) $413,848.90
(4) $400,078.00

Answers: 31(2) 32(1), 33(3)

©2022 GOBC Training Ltd 78