You have $400,000 to invest in a residential property worth $3,000,000 in Mong Kok and you...

 

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You have $400,000 to invest in a residential property worth $3,000,000 in Mong Kok and you are choosing between the following fully amortizing monthly mortgages. (i) a $2,600,000 loan at 6% for 10 years and (ii) a $1,000,000 loan at 5% for 10 years and a second mortgage for $1,600,000 at 6.5% for 10 years. Which alternative would you choose and why? (10 marks) You have $400,000 to invest in a residential property worth $3,000,000 in Mong Kok and you are choosing between the following fully amortizing monthly mortgages. (i) a $2,600,000 loan at 6% for 10 years and (ii) a $1,000,000 loan at 5% for 10 years and a second mortgage for $1,600,000 at 6.5% for 10 years. Which alternative would you choose and why? (10 marks)

Answer rating: 100% (QA)

Part i Loan Amount 2600000 Period n 10 years12 120 months Rate r 6 pa or 05 per month Now to find mo... View the full answer