Question: A home builder is offering $ 1 0 0 , 0 0 0 loans for his homes at 9 percent for 2 5 years. Current

A home builder is offering $100,000 loans for his homes at 9 percent for 25 years. Current market rates are 9.5 percent for 25-year loans. The home would normally sell for $110,000 without any special financing. At what price should the builder sell the homes to earn, in effect, the market rate of interest on the loan (rounded to the nearest dollar)? Assume that the buyer would have the loan for the entire 25 years.
 A home builder is offering $100,000 loans for his homes at

Step by Step Solution

There are 3 Steps involved in it

1 Expert Approved Answer
Step: 1 Unlock blur-text-image
Question Has Been Solved by an Expert!

Get step-by-step solutions from verified subject matter experts

Step: 2 Unlock
Step: 3 Unlock

Students Have Also Explored These Related Finance Questions!