A real estate developer can afford no more than $500 per month in principal and interest payments. The most favorable loans available in the market are 1) a 10-year partially amortizing loan with an anual rate of 8% with 20,000 balloon payment and 2) a 10-year interest only loan with an annual rate of 9%. What is the maximum affordable purchase price with a 20% down payment?
A real estate developer can afford no more than $500 per month in principal and interest payments. The most favorable loans available in the market are 1) a 10-year partially amortizing loan with an anual rate of 8% with 20,000 balloon payment and 2) a 10-year interest only loan with an annual rate of 9%. What is the maximum affordable purchase price with a 20% down payment?
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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A 131.
Subject:- finance
Transcribed Image Text:A real estate developer can afford no more than
$500 per month in principal and interest
payments. The most favorable loans available in
the market are 1) a 10-year partially amortizing
loan with an anual rate of 8% with 20,000
balloon payment and 2) a 10-year interest only
loan with an annual rate of 9%. What is the
maximum affordable purchase price with a 20%
down payment?
O $40,250
O $69,062
O $83,333
O $62,777
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