Use this information to analyze weather it is better to own or rent the property with the following financing and rent options. Create an Excel Model to analyze the trade-offs. Property info Purchase price $1,000,000 Buying transaction fees: 15% of purchase price Initial rent: $85000/yr Rental growth rate: 5% Property appreciation rate: 6% Insurance: $4000/yr Maintenance: $4000/yr Expense growth: 3.5% Transaction fees for future sale: 12% of sale price Marginal tax rate: 30% Property tax: 2.0% of current property appraised value LTV: 80% Interest rate: 7% Loan Term: 30 yr Loan type: Annual pay CPM fully amortizing Tax exclusions: First $500,000 of gain on sale

Use this information to analyze weather it is better to own or rent the property with the following financing and rent options. Create an Excel Model to analyze the trade-offs. Property info Purchase price $1,000,000 Buying transaction fees: 15% of purchase price Initial rent: $85000/yr Rental growth rate: 5% Property appreciation rate: 6% Insurance: $4000/yr Maintenance: $4000/yr Expense growth: 3.5% Transaction fees for future sale: 12% of sale price Marginal tax rate: 30% Property tax: 2.0% of current property appraised value LTV: 80% Interest rate: 7% Loan Term: 30 yr Loan type: Annual pay CPM fully amortizing Tax exclusions: First $500,000 of gain on sale

Pfin (with Mindtap, 1 Term Printed Access Card) (mindtap Course List)

7th Edition

ISBN:9780357033609

Author:Randall Billingsley, Lawrence J. Gitman, Michael D. Joehnk

Publisher:Randall Billingsley, Lawrence J. Gitman, Michael D. Joehnk

Chapter5: Making Automobile And Housing Decisions

Section: Chapter Questions

Problem 6FPE: Calculating required down payment on home purchase. How much would you have to put down on a house...

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Return on Investment (ROI) Formula: ROI = [(Investment Gain – Cost of Investment) / Cost of Investment] X 100 You buy a parcel of land for $100,000. After spending $200,000 to build a home on said land, you put it on the market. Several months after listing the property, you sell it for $350,000.
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Calculating required down payment on home purchase. How much would you have to put down on a house with an appraised value of 105,000 when the lender required an 80 percent loan-to-value ratio?
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A case study analysis of leasing business equipment compared to purchasing the same equipment.How do you determine whether you should lease or buy a piece of equipment for your business? Let's assume you're faced with the following lease-or-buy decision:You can purchase a $50,000 piece of equipment by putting 25 percent down and paying off the balance at 10 percent interest with four annual installments of $11,830. The equipment will be used in your business for eight years, after which it can be sold for scrap for $2,500.The alternative is that you can lease the same equipment for eight years at an annual rent of $8,500, the first payment of which is due on delivery. You'll be responsible for the equipment's maintenance costs during the lease.You expect that your combined federal and state income tax rate will be 40 percent for the entire period at issue. You further assume that your cost of capital is 6 percent (the 10 percent financing rate adjusted by your tax rate).Question:Using…
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