The housing market is crazy right now! Sierra bought her condo for $250,000, 5 years ago. She paid a down payment of 10% of the cost of the house and took out a 30 yr. loan at 3.125% for the rest which she has been paying in monthly payments. Sierra realizes that she could sell her condo for $320,000 today. If she sells the condo she will first pay off what ever she still owes on the loan and the rest is hers to keep. What would her annual IRR be over the 5 years she owned the condo if she sells the condo today for $320,000 and she considers all of the amount she keeps to be profit?
The housing market is crazy right now! Sierra bought her condo for $250,000, 5 years ago. She paid a down payment of 10% of the cost of the house and took out a 30 yr. loan at 3.125% for the rest which she has been paying in monthly payments. Sierra realizes that she could sell her condo for $320,000 today. If she sells the condo she will first pay off what ever she still owes on the loan and the rest is hers to keep. What would her annual IRR be over the 5 years she owned the condo if she sells the condo today for $320,000 and she considers all of the amount she keeps to be profit?
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:The housing market is crazy right now! Sierra bought her condo for $250,000, 5 years ago. She
paid a down payment of 10% of the cost of the house and took out a 30 yr. loan at 3.125% for
the rest which she has been paying in monthly payments. Sierra realizes that she could sell her
condo for $320,000 today. If she sells the condo she will first pay off what ever she still owes on
the loan and the rest is hers to keep. What would her annual IRR be over the 5 years she
owned the condo if she sells the condo today for $320,000 and she considers all of the amount
she keeps to be profit?
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