A i) Mrs. S owns a freehold property in Jurong East, Singapore. She receives an income ofdollar 24,000 every year for 9 years from her rented property. Market rental is anticipated toincrease to dollar 12,500 per month in the 10th year.Calculate the market value when the required rate of return is 7% per annum.A ii) Mrs. Kobe owns 2 acres of freehold commercial land in New Jersey. She leased the landto Mr. Chris at a dollar of 120,000 per acre/per annum for a period of 15 years. Mr. Christhen sub-leased the land to Mr. Shang Chi for a period of 10 years with a rate of payment atdollar 50,000 per acre/per annum. The rate of return for the same properties is 7% per annumand sinking fund at 3%.Estimate the income gathered from this investment to Mrs. Kobe and Mr. Chris.A iii) A landlord needs a dollar of 250,000 to refurbish a condominium in five years' time. Hewill save money from rental income (paid monthly in arrears) each year and has found a safeinvestment paying a nominal rate of 3% per annum.Calculate the monthly amount the landlord should invest.

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Answered: A i) Mrs. S owns a freehold property in…

Essentials Of Investments

11th Edition

ISBN:9781260013924

Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.

Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.

Chapter1: Investments: Background And Issues

Section: Chapter Questions

Problem 1PS

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Ben and Zhang Manchester plan to buy a condominium. They will obtain a $214,000, 15-year mortgage at 7.5 percent. Their annual property taxes are expected to be $2,376. Property insurance is $1,464 a year, and the condo association fee is $270 a month. Based on these items, determine the total monthly housing payment for the Manchesters. (Exhibit 9-9) Note: Round time value factor to 2 decimal places and final answer to the nearest whole number. Total monthly housing payment
The Jacksons are considering selling their current residence, buying a small home near Avery’s parents for $220,000 with a $100,000 30-year mortgage at 3.5%, and investing the net proceeds in their retirement accounts and education accounts. They assume they will incur 2% in transaction costs for the purchase and 6% for the sale. They have asked you the following: What will be their payment (principal and interest only) on their new home? How much will they be able to invest in their retirement accounts and education accounts after selling the old house and buying the new house? If the Jacksons purchase the new house one year from today, what will be the balance on their mortgage when they retire? What is the income tax consequence of their sale and purchase strategy?
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A professor has two daughters that he hopes will one day go to college. Currently, in-state students at the local University pay about $21,208.00 per year (all expenses included). Tuition will increase by 3.00% per year going forward. #11 O unanswered The professor's oldest daughter, Sam, will start college in 16 years, while his youngest daughter, Ellie, will begin in 18 not_submitted years. The professor is saving for their college by putting money in a mutual fund that pays about 9.00% per year. Tuition payments are at the beginning of the year and college will take 4 years for each girl. (Sam's first tuition payment will be in exactly 16 years) Attempts Remaining: Infinity The professor has no illusion that the state lottery funded scholarship will still be around for his girls, so how much does he need to deposit each year in this mutual fund to successfully put each daughter through college. (ASSUME that the money stays invested during college and the professor will make his last…
1. If Dave and his employer contribute a total of $10,000 annually, how much will that amount accumulate to over the next 30 years, at which time Dave and Sharon hope to retire? Future Value of Annuity Contribution Years Annual rate of return Future value $10,000 30 7.00% $944,607.86 2. Assuming that Dave's marginal tax bracket is 25 percent, by how much should his federal taxes decline this year if he contributes $7,000 to his retirement account? 3. The Sampsons' tax bracket has not changed. Assuming that Dave contributes $7,000 to his retirement account and that his taxes are lower as a result, by how much are Dave's cash flows reduced over the coming year? (Refer to your answer in question 2 when solving this problem.) 4. If Dave contributes $7,000 to his retirement account, he will have less cash inflows as a result. How can the Sampsons afford to make this contribution? Suggest some ways that they may be able to offset the reduction in cash inflows.
Q1: An engineering graduate plans to buy a home. She has been advised that her monthly house and property tax payment should not exceed 34% of her disposable monthly income. After researching the market, she determines she can obtain a 25-year home loan for 6.95% annual interest per year, compounded monthly. Her monthly property tax payment will be approximately $175. What is the maximum amount she can pay for a house if her disposable monthly income is $2400?
D4) Bob buys a property that costs $1,000,000. The property is projected to generate NOI as follows: Year NOI 1 $100,000 2 $105,000 3 $110,000 Bob will own the property for two years. Bob will sell the property at the end of year 2 at a cap rate that is 250 basis points lower than the cap rate at which he bought the property. What is Bob’s annualized IRR for the investment in question A. 26.21% B. 14.89% C. 30.47% D. 27.78%
Chad purchased a house for $475,000. He made a downpayment of 20% of the value of the house and received a mortgage for the rest of the amount at 6.25% compounded semi-annually for 20 years. The interest rate was fixed for a 5-year term. a. Calculate the principal balance at the end of the 5-year term. b. Calculate the size of the monthly payments if after the first 5-year term the mortgage was renewed for another 5-year term at 6.00% compounded semi-annually?
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1. Jose Garcia's life long dream is to own a fishing boat to use in his retirement. Jose has recently come into an in heritance of $400,000. He estimates that the boat he wants will cost $300,000 when he retires in 5 years. How much of his in heritance must he invest at an annual rate of 8% compounded annually) to buy the boat at retirement? 2. Refer to the data in BE6.7. Assuming quarterly compounding of amounts invested at 8%, how much of Jose Garcia's in heritance must be invested to have enough at retirement to buy the boat?

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