Assume you are investing in a home between $100,000 and $400,000 in Texas. Assume a price...

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Assume you are investing in a home between $100,000 and $400,000 in Texas. Assume a price that has not been chosen by another student; for example, if a student has chosen a $300,000 home price, then no other student should choose a $300,000 home. Assume you borrow 80% of the purchase price at a 3.75 % interest rate. Assume interest and principal are paid annually, at the end of each year for 15 years. This will be a 15-year loan. 1. What is your annual payment? 2. What is the loan balance after 4 years? 3. How much total payment you have made after 4 years? 4. Suppose at the end of year 2, you spend $5,000 and at the end of year 3 you spend another $6,000 for the upkeep of your home. Suppose at the end of year 4 you sell your home at 30 % above the purchase price. What is the NPV of your home investment? Use a 3.75% discount rate. The IRR of your real estate investment? Assume you are investing in a home between $100,000 and $400,000 in Texas. Assume a price that has not been chosen by another student; for example, if a student has chosen a $300,000 home price, then no other student should choose a $300,000 home. Assume you borrow 80% of the purchase price at a 3.75 % interest rate. Assume interest and principal are paid annually, at the end of each year for 15 years. This will be a 15-year loan. 1. What is your annual payment? 2. What is the loan balance after 4 years? 3. How much total payment you have made after 4 years? 4. Suppose at the end of year 2, you spend $5,000 and at the end of year 3 you spend another $6,000 for the upkeep of your home. Suppose at the end of year 4 you sell your home at 30 % above the purchase price. What is the NPV of your home investment? Use a 3.75% discount rate. The IRR of your real estate investment?

Answer rating: 100% (QA)

1 To calculate the annual payment we need to use the formula for an amortized loan Monthly Payment Loan Amount x Monthly Interest Rate 1 1 Monthly Interest RateNumber of Payments Where Loan Amount is ... View the full answer