Marlene is 29 years old, and would like to save a deposit to buy her first home in Samilan by the age of 36. The average house price in this area is expected to be $380,000, with a recommended deposit of 20% when financing a purchase. c. Assume that Marlene finds the repayments in part b) too excessive before signing her application and can only afford to pay $7,000 per year. How much could she borrow, given her lower budget, and what is the maximum value of the home she can afford (including stamp duty). given the deposit and stamp duty provision she has saved from part a)?. Again, assume an annual variable interest rate of 5% p.a. and daily compounding for 25 years.
Marlene is 29 years old, and would like to save a deposit to buy her first home in Samilan by the age of 36. The average house price in this area is expected to be $380,000, with a recommended deposit of 20% when financing a purchase. c. Assume that Marlene finds the repayments in part b) too excessive before signing her application and can only afford to pay $7,000 per year. How much could she borrow, given her lower budget, and what is the maximum value of the home she can afford (including stamp duty). given the deposit and stamp duty provision she has saved from part a)?. Again, assume an annual variable interest rate of 5% p.a. and daily compounding for 25 years.
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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please answer C quickly thanks !
Transcribed Image Text:Marlene is 29 years old, and would like to save a deposit to buy her first home in Samilan by the age
of 36. The average house price in this area is expected to be $380,000, with a recommended deposit
of 20% when financing a purchase.
c. Assume that Marlene finds the repayments in part b) too excessive before signing her application
and can only afford to pay $7,000 per year. How much could she borrow, given her lower
budget, and what is the maximum value of the home she can afford (including stamp duty),
given the deposit and stamp duty provision she has saved from part a)?. Again, assume an annual
variable interest rate of 5% p.a. and daily compounding for 25 years.
Transcribed Image Text:a. Assuming that property prices are not expected to grow in the medium term, how much money
will she need to put into her bank account per year over the next 7 years to afford the
recommended deposit and stamp duty for an average house in Samilan? Assume that she
currently has a bank account balance of $57,000, savings account interest rates will remain
stable at 2.0%, and interest is compounded daily. Assume an additional Stamp duty cost of 4%
of the property value upon purchase. Stamp duty in this case must be paid for with her own
savings and cannot be borrowed.
b. If Marlene is successful in her loan application in 7 years' time, calculate her annual loan
repayments if the loan term is 25 years and the annual variable home loan interest rate is 5%
p.a. compounded daily.
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