Question: (a) How does a freehold estate differ from a leasehold estate? (4 marks) suppose a house in UK can generate a constant rental income of

(a) How does a freehold estate differ from a leasehold estate? (4 marks)

suppose a house in UK can generate a constant rental income of 20000 per year, using a 4% discount rate, how much does it worth if

(i) it is a freehold estate? (2 marks)

(ii) it is a leasehold estate than an occupant can use for 50 years? (2 marks)

(b) How does a fully-amortizing loan differ from a negatively amortizing loan? Under what situations would a borrower prefer to use a negative amortizing loan? (8 marks) (c) What is the difference between warranty and abstract and opinion? In your opinion, which one is better? (6 marks)

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