MAP4C: Mortgage Expenses Assignment - Calculating Annual Housing Costs

This assignment solution provides detailed answers to a MAP4C lesson assignment focusing on mortgage expenses. The assignment includes multiple-choice questions that require students to calculate various housing costs, such as rent, utilities, and mortgage payments. Students are tasked with determining annual expenses, analyzing the impact of bi-weekly payments, and calculating the percentage of income spent on housing. The solution covers a range of scenarios, including calculating total mortgage costs, property tax payments, and annual housing costs for different payment schedules and income levels. The assignment also explores the impact of homeownership costs on household income, requiring students to calculate the percentage of income spent on housing. Additionally, the solution includes calculations for savings and financing options related to home renovations, comparing the costs of different financing methods. The assignment aims to provide a comprehensive understanding of mortgage expenses and financial planning related to homeownership.

MAP4C Lesson Assignment 20
n this assignment you are going to focus on: Mortgage Expenses
Total Marks: 80 marks
Instructions:
After completing the lesson action section of your home page, you are ready to complete your lesson assignment. Follow
these steps.
a) In the textbox given, explain the strategy that you used to determine your answer.
b) Fill in your answer. The mark for each question is given at the introduction to the questions to be completed.
c) When finished answering all your questions, save your file and upload the file into the appropriate dropbox.
Part A (Using the Concepts): Multiple Choice: ( marks) Each question is worth different marks according to the
strategy used. If calculations are required, the mark for the strategy will worth more marks and the final answer will be
worth one mark.
Identify the choice that best completes the statement or answers the question. Your choices are given below the text box.
Make sure you include your strategy.
1. (four marks) John moved out of his parents’ home and into a one-bedroom apartment four months ago. He
recorded his expenses over this period.
Jan. 01 - first and last months’ rent - $1500
Jan. 07 - activate cable - $75
Jan. 14 - top up cellular telephone time - $25
Feb. 01 - rent - $750
Feb. 15 - natural gas bill - $109
Feb. 24 - electricity bill - $56
Mar. 01 - rent - $750
Mar. 10 - cable bill - $62.58
Mar. 17 - natural gas bill - $98
Mar. 30 - top up cellular telephone time - $40
Apr. 01 - rent - $750
Apr. 19 - natural gas bill - $75
Apr. 25 - electricity bill - $55
a) Calculate John’s expenses by type for the four months.
b) Which expense is most likely to decrease over the next few months?
MAP4C Lesson Assignment Page 1

a)
Total Elctricity bill: $111
Total Rent : $ 3750
Total Cable Expenses: $ 137.58
Total Top Up For Cellular Expenses: $ 65
Total natural gas bill: $ 282
b)
The bill for natural gas is likely to decrease for the next few months.
2. (four) marks) Amala earns approximately $35 000 per year. Her net earnings are 85% of her gross earnings.
One-bedroom apartments in her city rent for $700 per month on average. Two-bedroom apartments rent for
$850 per month on average.
a) Calculate Amala’s net income.
b) Which apartment can Amala comfortably afford and why?\
a) Amala’s net income: 0.85 * 35000 = 29750
b) Yearly cost for one bedroom apartment: 700*12 = 8400
Yearly cost for two bedroom apartment: 850*12 = 10200
Thus Amala can afford both the apartments comfortably though choosing the one bedroom
apartment will leave her with more savings.
b
3. (four marks) Sergei and Anya own a three-bedroom bungalow. They make weekly mortgage payments of
$217.98. They make quarterly payments for property taxes of $1257. They have a bank account set up for
home repairs into which they put in $275 each month. The average total monthly bill for water, home
insurance, cable television, and telephone is $449. What are the total annual expenses associated with the
house to the nearest hundred dollars?
MAP4C Lesson Assignment Page 2

Total annual expenses: (12*4*217.98 + 4*1257 + 12* 275 + 449) = $19240.04
4. (four marks) Calculate the total mortgage cost for one year for bi-weekly mortgage payments of $654.22.
Total number of weeks in a year: 4* 12 = 48
Total number of payments = 48*2 = 96
Total mortgage cost: 654.22 * 96 = $62803.2
5. (four marks) Calculate the property tax payment for $3578 annual taxes, paid quarterly.
Property tax payment = 4* 3578 = $14312
6. (four marks) Calculate the annual costs for a family with weekly mortgage payments of $407.56 and
quarterly property tax payments of $654.89.
Annual costs : 407.56*48 + 654.89*4 = $ 22182.44
7. (four marks) Calculate the total annual housing costs for a couple with bi-weekly mortgage payments of
$978.88, monthly condominium fees of $325, and monthly utility expenses averaging $275.
MAP4C Lesson Assignment Page 3

Total annual housing costs : 978.88*12*4*2 + 325*12 +275*12 = $101172.5
8. (four marks) Calculate the total annual housing costs for a family with bi-weekly mortgage payments of
$1007.45, quarterly property taxes of $625.64, and monthly utility expenses averaging $375.
Total annual housing costs: 1007.45*12*4*2 + 625.64*4 + 375*12 = $103717.8
9. (four marks) A couple makes bi-weekly mortgage payments of $978.88, monthly condominium fees of $325,
and monthly utility expenses averaging $275. The combined household net income is $120 000. Calculate the
percent of the total income spent on costs associated with owning a home. Round your answer to the nearest
percent.
Total yearly spending on housing : 978.88*12*4*2 + 325*12 + 275*12 = $ 101172.5
Net Income = 120,000
Percent spent on costs associated with owning a home: (101172.5 / 120 000) = 84.31 %
MAP4C Lesson Assignment Page 4

10. (four marks) A family makes bi-weekly mortgage payments of $1007.45, quarterly property taxes of
$625.64, and monthly utility expenses averaging $375. The combined household net income is $90 000.
Calculate the percent of the total income spent on costs associated with owning a home. Round your answer
to the nearest percent.
Total amount spent on housing: (1007.45*12*4*2 ) = $96715.2
Net income : $ 90000
Percent spent on housing :
11. (four marks) Kally and Jared have owned their home for a year. A copy of their expenses spreadsheet is
shown. In which month did Kally and Jared have the greatest home expenses?
A B C D E F G H
1 Mortgage Property
Tax
Home
Insurance
Natural
Gas
Electricity Water Telephone/
Cable/
Internet
2 January 1087.98 46.00 321.76 129.76
3 February 1087.98 46.00 279.87 235.54 129.76
4 March 1087.98 772.13 46.00 284.89 129.76
5 April 1087.98 46.00 256.13 238.93 65.87 129.76
6 May 1087.98 46.00 129.76
7 June 1087.98 772.13 46.00 211.54 129.76
8 July 1087.98 46.00 129.76
9 August 1087.98 46.00 189.01 76.89 129.76
10 September 1087.98 772.13 46.00 129.76
11 October 1087.98 46.00 232.12 190.12 129.76
12 November 1087.98 46.00 245.23 129.76
13 December 1087.98 772.13 46.00 289.78 213.76 69.96 129.76
MAP4C Lesson Assignment Page 5

A B C D E F G H
1 Mortgag
e
Property Home
Natural
Gas
Electricit
y Water
Telephon
e/ Total
Tax Insuranc
e Cable/
Internet
2 January 1087.98 46 321.76 129.76 1585.5
3 Februar
y 1087.98 46 279.87 235.54 129.76 1779.15
4 March 1087.98 772.13 46 284.89 129.76 2320.76
5 April 1087.98 46 256.13 238.93 65.87 129.76 1824.67
6 May 1087.98 46 129.76 1263.74
7 June 1087.98 772.13 46 211.54 129.76 2247.41
8 July 1087.98 46 129.76 1263.74
9 August 1087.98 46 189.01 76.89 129.76 1529.64
10 Septem
ber 1087.98 772.13 46 129.76 2035.87
11 October 1087.98 46 232.12 190.12 129.76 1685.98
12 Novemb
er 1087.98 46 245.23 129.76 1508.97
13 Decemb
er 1087.98 772.13 46 289.78 213.76 69.96 129.76 2609.37
Highest monthly expenses occurred in December
MAP4C Lesson Assignment Page 6

12. (three marks) Kally and Jared have owned their home for a year. A copy of their expenses spreadsheet is
shown. How much did they spend on mortgage payments for the year?
A B C D E F G H
1 Mortgage Property
Tax
Home
Insurance
Natural
Gas
Electricity Water Telephone/
Cable/
Internet
2 January 1087.98 46.00 321.76 129.76
3 February 1087.98 46.00 279.87 235.54 129.76
4 March 1087.98 772.13 46.00 284.89 129.76
5 April 1087.98 46.00 256.13 238.93 65.87 129.76
6 May 1087.98 46.00 129.76
7 June 1087.98 772.13 46.00 211.54 129.76
8 July 1087.98 46.00 129.76
9 August 1087.98 46.00 189.01 76.89 129.76
10 September 1087.98 772.13 46.00 129.76
11 October 1087.98 46.00 232.12 190.12 129.76
12 November 1087.98 46.00 245.23 129.76
13 December 1087.98 772.13 46.00 289.78 213.76 69.96 129.76
Total mortgage payment over the year: (12*1087.98) = 13055.76
MAP4C Lesson Assignment Page 7

13. (four marks) Kally and Jared have owned their home for a year. A copy of their expenses spreadsheet is
shown. How much did they spend on fixed expenses for the year?
A B C D E F G H
1 Mortgage Property
Tax
Home
Insurance
Natural
Gas
Electricity Water Telephone/
Cable/
Internet
2 January 1087.98 46.00 321.76 129.76
3 February 1087.98 46.00 279.87 235.54 129.76
4 March 1087.98 772.13 46.00 284.89 129.76
5 April 1087.98 46.00 256.13 238.93 65.87 129.76
6 May 1087.98 46.00 129.76
7 June 1087.98 772.13 46.00 211.54 129.76
8 July 1087.98 46.00 129.76
9 August 1087.98 46.00 189.01 76.89 129.76
10 September 1087.98 772.13 46.00 129.76
11 October 1087.98 46.00 232.12 190.12 129.76
12 November 1087.98 46.00 245.23 129.76
13 December 1087.98 772.13 46.00 289.78 213.76 69.96 129.76
Total mortgage payment for the year = 12*1087.98 = 13055.76
Total property tax payment for the year: 4*772.13 = 3088.52
Total Home insurance payment for the year : 46*12 = 3088.52
Total tele/cable/internet bill payment for the year: 129.76*12 = 1557.12
Total fixed expenses : $18253.4
14. (four marks) Kally and Jared have owned their home for a year. A copy of their expenses spreadsheet is
shown. What is their average monthly electricity cost?
A B C D E F G H
1 Mortgage Property
Tax
Home
Insurance
Natural
Gas
Electricity Water Telephone/
Cable/
Internet
2 January 1087.98 46.00 321.76 129.76
3 February 1087.98 46.00 279.87 235.54 129.76
4 March 1087.98 772.13 46.00 284.89 129.76
5 April 1087.98 46.00 256.13 238.93 65.87 129.76
6 May 1087.98 46.00 129.76
7 June 1087.98 772.13 46.00 211.54 129.76
8 July 1087.98 46.00 129.76
9 August 1087.98 46.00 189.01 76.89 129.76
10 September 1087.98 772.13 46.00 129.76
11 October 1087.98 46.00 232.12 190.12 129.76
MAP4C Lesson Assignment Page 8

12 November 1087.98 46.00 245.23 129.76
13 December 1087.98 772.13 46.00 289.78 213.76 69.96 129.76
Average monthly electricity expense is found by taking a sum of the total electricity expenses and dividing
the total by 12
Average monthly electricy cost : $17.76
15. (four marks) Kally and Jared have owned their home for a year. A copy of their expenses spreadsheet is
shown. If Kally and Jared’s expenses were all paid monthly, how much would they pay each month?
A B C D E F G H
1 Mortgage Property
Tax
Home
Insurance
Natural
Gas
Electricity Water Telephone/
Cable/
Internet
2 January 1087.98 46.00 321.76 129.76
3 February 1087.98 46.00 279.87 235.54 129.76
4 March 1087.98 772.13 46.00 284.89 129.76
5 April 1087.98 46.00 256.13 238.93 65.87 129.76
6 May 1087.98 46.00 129.76
7 June 1087.98 772.13 46.00 211.54 129.76
8 July 1087.98 46.00 129.76
9 August 1087.98 46.00 189.01 76.89 129.76
10 September 1087.98 772.13 46.00 129.76
11 October 1087.98 46.00 232.12 190.12 129.76
12 November 1087.98 46.00 245.23 129.76
13 December 1087.98 772.13 46.00 289.78 213.76 69.96 129.76
Total expense including all the different types of cost associated and adding them for the 12 months:
$21654.8 (Using Excel)
Average monthly cost: 21654.8/12 = $1804.57
MAP4C Lesson Assignment Page 9

16. (four marks) Eileen and Charlie want to renovate their bathroom. They receive a quote of $7500 from
Baths of Beauty. They plan to get the work done in one year from now. They have an account that pays
3.15% per year, compounded monthly. How much must they deposit each month to have $7500 saved in one
year?
Here, A = 7500, r = 3.15% , n =12, Y = 1
PMT = ( A∗r
n )/ [ (1+ r
n )nY
−1 ]
Solving we have: Monthly payment needed: $616.03
MAP4C Lesson Assignment Page 10

17. (six marks) Eileen and Charlie want to renovate their bathroom. They receive a quote of $7500 from Baths of
Beauty. They plan to get the work done in one year from now.
They have two options to finance the renovations.
Option 1: Make monthly deposits into an account that pays 3.15% per year, compounded monthly to obtain
$7500.
Option 2: Obtain a personal loan for $7500 with a three-year term at 5.65% per year, compounded monthly.
How much would Eileen and Charlie save by taking Option 1 instead of Option 2?
Monthly payment for option 1: 616.03
Money spent by choosing option 1 : 616.03*12 = $ 7392.33
Monthly payment for option 2 : $ 226.98
Money spent by choosing option 2 : 229.98*36 = $ 8279.28
Savings : 8279.28 – 7392.33 = $886.95
18. (eight marks) Eileen and Charlie want to renovate their bathroom. They receive a quote of $7500 from Baths
of Beauty. They plan to get the work done in one year from now.
They have two options to finance the renovations.
Option 1: Make monthly deposits into an account that pays 3.15% per year, compounded monthly to obtain
$7500.
Option 2: Obtain a personal loan for $7500 with a three-year term at 5.65% per year, compounded monthly.
Why might the couple choose Option 2 instead of Option 1?
MAP4C Lesson Assignment Page 11

Monthly payment for option 1: 616.03
Money spent by choosing option 1 : 616.03*12 = $ 7392.33
Monthly payment for option 2 : $ 226.98
Money spent by choosing option 2 : 229.98*36 = $ 8279.28
Savings : 8279.28 – 7392.33 = $886.95
The couple might choose option 2 over option 1 if they cannot afford higher monthly payment over the
year.
MAP4C Lesson Assignment Page 12