Complete this question by entering your answers in the tabs below.Required A Required BThe lender is now concerned that if the property does not sell, investor may have to carry the property for one additional year.He believes that he could rent it (starting in year 2) and realize a net cash flow before debt service of $1,440 per month.However, he would have to make an additional $7,440 in interest payments on his loan during that time, and then sell. Whatwould the price have to be at the end of year 2 in order to earn a 20 percent IRR on equity?Note: Do not round intermediate calculations. Round your final answer to nearest whole dollar amount.Sale value of propertyShow less A An investor is considering the acquisition of a "distressed property" which is on Northlake Bank's REO list. The property is available for$200,800 and the investor estimates that he can borrow $160,000 at 4.5 percent interest and that the property will require thefollowing total expenditures during the next year:InspectionTitle searchRenovationLandscapingLoan interestInsuranceProperty taxesSelling expensesRequired:a. The investor is wondering what such a property must sell for after one year in order to earn a 20 percent return (IRR) on equity.b. The lender is now concerned that if the property does not sell, investor may have to carry the property for one additional year. Hebelieves that he could rent it (starting in year 2) and realize a net cash flow before debt service of $1,440 per month. However, hewould have to make an additional $7,440 in interest payments on his loan during that time, and then sell. What would the price have tobe at the end of year 2 in order to earn a 20 percent IRR on equity?Required A$5121,02413,000Complete this question by entering your answers in the tabs below.Required B8247,2121,8126,0128,000Sale value of propertyThe investor is wondering what such a property must sell for after one year in order to earn a 20 percent return (IRR) onequity.Note: Do not round intermediate calculations. Round your final answer to nearest whole dollar amount.

a) Sale price required in Year 1 to earn 20% IRR:Initial equity investment: Purchase price:…

The lender is now concerned that if the property does not sell, investor may have to carry the property for one additional year. He believes that he could rent it (starting in year 2) and realize a net cash flow before debt service of $1,440 per month. However, he would have to make an additional $7,440 in interest payments on his loan during that time, and then sell. What would the price have to be at the end of year 2 in order to earn a 20 percent IRR on equity?

The lender is now concerned that if the property does not sell, investor may have to carry the property for one additional year. He believes that he could rent it (starting in year 2) and realize a net cash flow before debt service of $1,440 per month. However, he would have to make an additional $7,440 in interest payments on his loan during that time, and then sell. What would the price have to be at the end of year 2 in order to earn a 20 percent IRR on equity?

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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= You would like to buy a house that costs $350,000. You have $55,000 in cash that you can put down on the house, but you need to borrow the rest of the purchase price. The bank is offering a 30-year mortgage that requires annual payments and has an interest rate of 7% per year. You can afford to pay only $23,060 per year. The bank agrees to allow you to pay this amount each year, yet still borrow $295,000. At the end of the mortgage (in 30 years), you must make a balloon payment; that is, you must repay the remaining balance on the mortgage. How much will this balloon payment be? The balloon payment is $ (Round to the nearest cent.)
According to money.CNN.com, with mortgage rates near 35-year lows, you may be able to cut your payments sharply by refinancing your loan. To qualify for the best rates, you need a credit score of 740 or higher and usually at least 20% equity. Even if you have to settle for a higher rate, a new loan may save you money. The main consideration is whether you will live in your home long enough to offset the refinance closing costs. Your current mortgage payment is $1,678.50 per month, with a balance of $218,800. Suppose you have a chance to refinance at a certain bank with a 30-year, 5.75% mortgage. The closing costs of the loan are application fee, $80; credit report, $165; title insurance, 0.4% of the amount financed; title search, $360; and attorney's fees, $570. You plan to live in your home for at least four more years. Use the Mortgage Refinancing Worksheet to see if it makes sense to refinance your mortgage a) What is your currently monthly mortgage (in $)? $ (b) Using this…
the price of a house is $400,000. Then, you make a down payment of $130,000 and take a 30-year mortgage for the balance. (a) what is your down payment? (b) what is your mortgage ? (c) what is the total interest charged over the life of the loan if your monthly payment is 1350 dollars?
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Kelly and Tim Browne plan to refinance their mortgage to obtain a lower interest rate. The Browns will reduce their mortgage payments by $88 a month and incur closing costs of $2,360 as a result of refinancing. How long will it take them to recover the cost of refinancing? (Round your answer to 1 decimal place.) Recovery time months
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You need $15,000 to purchase a used car. Your wealthy uncle is willing to lend you the money as an amortized loan. He would like you to make annual payments for 4 years, with the first payment to be made one year from today. He requires a 8% annual return. What will be your annual loan payments? Round your answer to the nearest cent. Do not round intermediate calculations.

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