Question: Just need help with C, D, and E, thanks! You just bought a rent house in Los Angeles, CA for $100,000, with $20,000 down and

Just need help with C, D, and E, thanks!

You just bought a rent house in Los Angeles, CA for $100,000, with $20,000 down and the balance in the form of a 15-year amortization mortgage at a fixed rate of 5.0% and monthly payments. Your principal, interest, property tax, and insurance, plus all costs of maintaining the property, are covered by your rent.

a) How much are your monthly mortgage payments?

=$632.63

b) The University grows, and prices appreciate at the rate of 6% per year. What will the value of the house be in 6 years? What will the outstanding principal of the debt be (assume no extra payments)? What will the value of the equity be?

Value of the house in 6 years= $141,841.91

Outstanding principle of debt= $54,929.64

Value of the Equity= $86,922.27

c) Using CAGR, what is your rate of return on your equity? Why is it so high compared to housing market price appreciation?

Rate of return on equity= 13.81%

d) At this CAGR rate, how long will it take to double your money?

e) What shape of yield curve is often (but not always) followed by an economic downturn and stock market correction/crash? What is the current shape of the yield curve? What does this suggest about the near future for the stock market - and why?

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