Assume that the average price for a 2,000-square-foot house in the city is $330,000 and the average rent for a 2,000-square-foot apartment in the cilty is $1,500 permonth. Also assume that the average price for a 2,000-square-foot house in the suburbs is $220,000, the average price for a 2,000-square-foot house in the countyis 5350,000, and the average price for a 3,000-square-foot house in the suburbs is $500,000Using comparative statics and the information above, what is the best estimate of the effect of living in the city (relative to living in the suburbs) on home prices?Living in the city changes home prices by s (Round your respanse to hwo decimal places) Suppose apartments are in four locations Location A Location B, Location C, and Location D. Location Ais in the city where your job is Location Bis 10 minutesfarther from your job than Location A Location Cis 10 minutes farther bom your job than Location B, and Location Dis 10 minuts farther than Location C in tumsimilar apartments in Location B rent for S125 less per month than apartments in Location A apartments in Location C rent for $125 less than in Location B. andapartments in Lecation Drent for $125 less than in Location C Suppose the value of your time is $18 per hour and you work 21 days per month with each dayrequiring a round rip commute from your apartment to workFor simplicity asume rent and the opportunity cost of your time commuing to work are the only lactors infuencing the focation in which to rent an apartmentYou should rent an apartment inSuppose you curently nt an apartment in Location CDy moving to optimize, you change your net beneft by Ener your respone at an nteger)

NOTE: As per our policy we only have one question when different questions are posted. Therefore,…

Assume that the average price for a 2,000-square-foot house in the city is $330,000 and the average rent for a 2,000-square-foot apartment in the city is $1.500 per month. Also assume that the average price for a 2,000-square-foot house in the suburbs is $220,000, the average price for a 2.000-square-foot house in the county is $350,000, and the average price for a 3,000-square-foot house in the suburbs is $500,000 Using comparative statics and the information above, what is the best estimate of the effect of living in the city (relative to living in the suburbe) on home prices? Living in the city changes home prices by S (Round your reaponse to hwo decamal places)

Assume that the average price for a 2,000-square-foot house in the city is $330,000 and the average rent for a 2,000-square-foot apartment in the city is $1.500 per month. Also assume that the average price for a 2,000-square-foot house in the suburbs is $220,000, the average price for a 2.000-square-foot house in the county is $350,000, and the average price for a 3,000-square-foot house in the suburbs is $500,000 Using comparative statics and the information above, what is the best estimate of the effect of living in the city (relative to living in the suburbe) on home prices? Living in the city changes home prices by S (Round your reaponse to hwo decamal places)

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

See similar textbooks

Similar questions

A young couple just had their first baby and is looking for additional income. They are considering renting out the space above their garage as an apartment. To convert the space, the couple will have to invest $30,000.00 today. It will take one year before they can begin renting the space. Let’s suppose that they can rent the apartment for $5,000.00 per year for ten years. (first payment will be in one year)). What is the IRR of this investment?
Maximum house you can afford. You have an income of $70,000 per year. You are applyingfor a 4.5%, 80% L TV, 30-year FRM. Property Taxes are 2.75% of the house value, andinsurance is 0.85% of the house value. Your LTO are $525 per month. You will be qualifiedon a 43% back end ratio. What is the maximum house you can afford assuming you haveenough saved to pay the costs at closing? If closing costs are 3.15% of the house value,how much money will you need to bring to closing?
The Jacksons want to buy a condo in Langley. This will be their first property. Their combined gross annual salary is $108,000. They estimate that the property taxes are $2,400/year, strata fees $200/month and heating costs average $50/month. Banks use the affordability rule: no more than 32% of gross monthly hosehold income can go tawards paying the mortgage, property taxes, heating costs and 50% of the condo fees. What is the maximum monthly mortgage payment they could afford? Your Answer: Answer
3. A village has six residents, each of whom has accumulated savings of $100. Each villager can use this money either to buy a government bond that pays 15% per year. Or they can buy a llama, send it onto the commons to graze and then sell it after one year. The price the villager gets for selling the llama depends on quality of fleece it grows. The quality of fleece depends on how many llamas are grazing. At the end of the year the villager will have $115 if they buy the bond or $109-$122 if they buy the llama depending on how many llamas are purchased Number of Llamas 1 2 3 4 5 6 Price per Llama 122 118 116 114 112 109 a. If each villager decides individually how to invest, how many llamas will be sent onto the commons and what will be the net village income? b. What is the socially optimal number of llamas for this village? c. The village committee votes to auction the right to graze the llamas to the highest bidder. How much will the grazing right sell for? What will be the net…
if i work for $8.75 an hour for 10 hours a week and the new cars cost is $436, how many weeks including tax would i have to work to meet this goal
7
Assume an apartment has a floor area of 3,000 SF. The existing rent per month is $3,000. The market level rent is $15,000 per month. Assume that the tenant is willing to enter into a voluntary vacate agreement to be bought out of his lease and that you are now negotiating a buy out price. The apartment requires an additional $200,000 in renovation to get it up to market standards. If a prevailing cap rate for this apartment is 4.0%, at what buy out price is the incremental value created by the landlord for this unit after renovations equal to zero? O $3,40,000 O $2,350,000 O $1,000,000 O $3,100,000
g. Living Expenses: Assume reasonable values for your living expenses. (You may adjust these numbers to fit your estimated costs, but a good starting point for monthly costs are Utilities: $150, TV: $40, Internet: $30, Cell Phone: $40, Phone: $40) You should also include estimates for food, gas, entertainment, and any other expense you can think of. What is your monthly payment for all of your living expenses?
A family spends $30,000 a year for living expenses. If prices increase by 5 percent a year for the next three years, what amount will the family need for their living expenses after three years?
Seth and Alexandra Moore of Elk Grove Village, Illinois have an annual income of $120,000 and want to buy a home. Currently, mortgage rates are 4.0 percent. The Moores want to take out a mortgage for 30 years. Real estate taxes are estimated to be $5,160 per year for homes similar to what they would like to buy, and homeowner's insurance would be about $1,620 per year. Using a 28 percent front-end ratio, what are the total annual and monthly expenditures for which they would qualify? Round your answers to the nearest dollar. Total annual expenditures $ Monthly expenditures $ Using a 36 percent back-end ratio, what monthly mortgage payment (including taxes and insurance) could they afford given that they have an automobile loan payment of $450, a student loan payment of $350, and credit card payments of $270? (Hint: Subtract these amounts from the total monthly affordable payments for their income to determine the amount left over to spend on a mortgage.) Round your…
"Jim has an annual income of $240,000. Jim is looking to buy a house with monthly property taxes of $1000 and monthly homeowner s insurance of $200. Jim has $1,500 in monthly student loan payments and an average monthly credit card bill of $1,000. Apple bank has a maximum front end DTI limit of 28% and a maximum back end DTI limit of 36%. Considering both the front end DTI limit and the back end DTI limit, what is the most they will allow Jim to spend on a monthly mortgage payment?"

Recommended textbooks for you

Essentials Of Investments

Finance

ISBN:

9781260013924

Author:

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

Publisher:

Mcgraw-hill Education,

FUNDAMENTALS OF CORPORATE FINANCE

Finance

ISBN:

9781260013962

Author:

BREALEY

Publisher:

RENT MCG

Financial Management: Theory & Practice

Finance

ISBN:

9781337909730

Author:

Brigham

Publisher:

Cengage

Foundations Of Finance

Finance

ISBN:

9780134897264

Author:

KEOWN, Arthur J., Martin, John D., PETTY, J. William

Publisher:

Pearson,

Fundamentals of Financial Management (MindTap Cou…

Finance

ISBN:

9781337395250

Author:

Eugene F. Brigham, Joel F. Houston

Publisher:

Cengage Learning

Corporate Finance (The Mcgraw-hill/Irwin Series i…

Finance

ISBN:

9780077861759

Author:

Stephen A. Ross Franco Modigliani Professor of Financial Economics Professor, Randolph W Westerfield Robert R. Dockson Deans Chair in Bus. Admin., Jeffrey Jaffe, Bradford D Jordan Professor

Publisher:

McGraw-Hill Education

Essentials Of Investments

Finance

ISBN:

9781260013924

Author:

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

Publisher:

Mcgraw-hill Education,

FUNDAMENTALS OF CORPORATE FINANCE

Finance

ISBN:

9781260013962

Author:

BREALEY

Publisher:

RENT MCG

Financial Management: Theory & Practice

Finance

ISBN:

9781337909730

Author:

Brigham

Publisher:

Cengage

Foundations Of Finance

Finance

ISBN:

9780134897264

Author:

KEOWN, Arthur J., Martin, John D., PETTY, J. William

Publisher:

Pearson,

Fundamentals of Financial Management (MindTap Cou…

Finance

ISBN:

9781337395250

Author:

Eugene F. Brigham, Joel F. Houston

Publisher:

Cengage Learning

Corporate Finance (The Mcgraw-hill/Irwin Series i…

Finance

ISBN:

9780077861759

Author:

Stephen A. Ross Franco Modigliani Professor of Financial Economics Professor, Randolph W Westerfield Robert R. Dockson Deans Chair in Bus. Admin., Jeffrey Jaffe, Bradford D Jordan Professor

Publisher:

McGraw-Hill Education

SEE MORE TEXTBOOKS