Finozest Solutions wish to purchase an apartment in Kabulonga which is situated in a tree-lined avenue. The purchase price, with costs, is K710,000 and it is able to obtain a 100% mortgage loan at an interest rate of 6%, interest compounded monthly. The term of the loan is 20 years. The property values are expected to rise at a rate of 9% per year (0.75% per month). Finozest Solutions will be able to rent out the apartment after costs at a rate of K4,000 per month for the first year. Interest and rent are payable at the beginning of each month. Required: What is the expected value of the apartment in 20 years-time? What is the mortgage loan repayment at the beginning of each month? What is the net amount that Finozest
Finozest Solutions wish to purchase an apartment in Kabulonga which is situated in a tree-lined avenue. The purchase price, with costs, is K710,000 and it is able to obtain a 100% mortgage loan at an interest rate of 6%, interest compounded monthly. The term of the loan is 20 years. The property values are expected to rise at a rate of 9% per year (0.75% per month). Finozest Solutions will be able to rent out the apartment after costs at a rate of K4,000 per month for the first year. Interest and rent are payable at the beginning of each month. Required: What is the expected value of the apartment in 20 years-time? What is the mortgage loan repayment at the beginning of each month? What is the net amount that Finozest
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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Transcribed Image Text:QUESTION TWO
Finozest Solutions wish to purchase an apartment in Kabulonga which is situated in a
tree-lined avenue. The purchase price, with costs, is K710,000 and it is able to obtain a
100% mortgage loan at an interest rate of 6%, interest compounded monthly. The term
of the loan is 20 years. The property values are expected to rise at a rate of 9% per year
(0.75% per month). Finozest Solutions will be able to rent out the apartment after costs
at a rate of K4,000 per month for the first year. Interest and rent are payable at the
beginning of each month.
Required:
What is the expected value of the apartment in 20 years-time? What is the mortgage loan
repayment at the beginning of each month? What is the net amount that Finozest
Solutions has to pay in each month.
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