You buy an apartment. The cost is $500,000 and you must provide a deposit of $100,000....

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You buy an apartment. The cost is $500,000 and you must provide a deposit of $100,000. Ignore purchasing and transaction costs. Rates and maintenance will cost you $9,000 per year. Assume this cost and the compounding of apartment value occurs at one point in time annually. Calculate the value of the apartment after 20 years assuming capital growth of 7% pa. Part 3: Finance costs (a) You have to pay for the house via a mortgage with Westpac Bank. Assume that you take out a $400,000 loan at a fixed rate of 2.1% pa for the first three years. For the next 17 years you will be paying fixed rate of 4% per annum. Interest is compounded monthly. How much interest will you pay to Westpac over the life of the loan (20 years)? (b) What if you were to pay off the loan early? What payment would be required if you were to pay out the loan after all the payments in the 15th year had been made? Part 4: Net position of the property investment Subtract the costs and the loan contributions (assuming the loan goes the full 20 years) from the value of the house after 20 years. Part 5: Present values If the appropriate discount rate is 5% per annum compounding monthly what is the present value of the superannuation fund, the apartment, the net position of the apartment? A separate number is required for each. You buy an apartment. The cost is $500,000 and you must provide a deposit of $100,000. Ignore purchasing and transaction costs. Rates and maintenance will cost you $9,000 per year. Assume this cost and the compounding of apartment value occurs at one point in time annually. Calculate the value of the apartment after 20 years assuming capital growth of 7% pa. Part 3: Finance costs (a) You have to pay for the house via a mortgage with Westpac Bank. Assume that you take out a $400,000 loan at a fixed rate of 2.1% pa for the first three years. For the next 17 years you will be paying fixed rate of 4% per annum. Interest is compounded monthly. How much interest will you pay to Westpac over the life of the loan (20 years)? (b) What if you were to pay off the loan early? What payment would be required if you were to pay out the loan after all the payments in the 15th year had been made? Part 4: Net position of the property investment Subtract the costs and the loan contributions (assuming the loan goes the full 20 years) from the value of the house after 20 years. Part 5: Present values If the appropriate discount rate is 5% per annum compounding monthly what is the present value of the superannuation fund, the apartment, the net position of the apartment? A separate number is required for each.

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Part 3 Finance costs a Interest paid over 20 years on the 400000 loa... View the full answer