Rebecca Young started working for an investment bank after completing her MBA. She has been under the dilemma of purchasing the new condominium at the price of 600,000 United States dollars or continue to live in a rented condominium with a monthly rent of 3,000 United States dollars. For the time being, she has been considering many options available to her in the investment. Whereas, she is keen on knowing the time value of money versus Rent. Because she has been living in the condominium and paying the rent of 3,000 United States dollars per month. On the other hand, it is the dilemma for her to purchase the new condominium for until next five (5) to ten (10) years or continue to live in a rented house, and pay rent.

It is important to know that there are many complications for her to understand, one that she would need to acquire a mortgage to finance the new condominium and pay down payment of 20 percent. Since it is also a concern for her that if the same amount invested in the same effective rate as the mortgage rate. Then which option would be best for. On the other hand, it can be determined that she is also keen to know about the opportunity cost in this condominium. For the time being, it is important to know what decision should be either to have rented condominiums or the new condominium should be purchased on the mortgage of 25 years with a down payment of 20 percent (Foerster, 2014).

Question:

What should be the decision of the young as per the analytical tools like time value of money that either should she continue to pay rent or that she should acquire a mortgage in given conditions?

Answer rating: 100% (QA)

To make an informed decision Rebecca Young should consider the time value of money and compare the costs and benefits of continuing to rent versus pur... View the full answer