Use Worksheet 5.2 and Exhibit 5.6. Emma Sanchez is currently renting an apartment for $575 per month and paying $400 annually for renter's insurance. She just found a small townhouse she can buy for $175,000. She has enough cash for a $10,000 down payment and $4,000 in closing costs. Emma estimated the following costs as a percentage of the home's price: property taxes, 2.5 percent; homeowner's insurance, 0.5 percent; and maintenance, 0.7 percent. She is in the 25 percent tax bracket and does not plan to itemize deductions on her taxes. Using Worksheet 5.2, calculate the cost of each alternative and recommend the least costly option - rent or buy - for Emma. Assume Emma's security deposit is equal to one month's rent of $575. Also assume a 4% after tax rate return on her savings, a 3% annual appreciation in home price, and a 6% mortgage interest rate for 30 years. a. Cost of renting. Round the answer to the nearest dollar. b. Cost of buying. Round the answer to to the nearest dollar. 2$ c. Emma should -Select- the home.

Use Worksheet 5.2 and Exhibit 5.6. Emma Sanchez is currently renting an apartment for $575 per month and paying $400 annually for renter's insurance. She just found a small townhouse she can buy for $175,000. She has enough cash for a $10,000 down payment and $4,000 in closing costs. Emma estimated the following costs as a percentage of the home's price: property taxes, 2.5 percent; homeowner's insurance, 0.5 percent; and maintenance, 0.7 percent. She is in the 25 percent tax bracket and does not plan to itemize deductions on her taxes. Using Worksheet 5.2, calculate the cost of each alternative and recommend the least costly option - rent or buy - for Emma. Assume Emma's security deposit is equal to one month's rent of $575. Also assume a 4% after tax rate return on her savings, a 3% annual appreciation in home price, and a 6% mortgage interest rate for 30 years. a. Cost of renting. Round the answer to the nearest dollar. b. Cost of buying. Round the answer to to the nearest dollar. 2$ c. Emma should -Select- the home.

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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Here is what we know: We are looking at purchasing a Townhome in Gvegas Purchase price $190,000 Yearly taxes $1,400/yr, but if it's in the city limits, then add another $800/yr Yearly Home Owners Insurance $ 1,200/yr HOA (Home Owners Association) $900/yr Projected repair costs $900/yr Vacancy Rate 1 months rent Things to consider.... What if the AC unit goes out? • Vacancy Rates (What is that?) • Vetting Renters (What does that mean?) Tax benefits (Are there any?) Depreciation (How so) ⚫ Appreciation (How does it work)
Use Worksheet 5.3. Rachel and Alexander Harrison need to calculate the amount they can afford to spend on their first home. They have a comt annual income of $67,500 and have $37,000 available for a down payment and closing costs. The Harrisons estimate that homeowner's insurance property taxes will be $250 per month. They expect the mortgage lender to use a 30 percent (of monthly gross income) mortgage payment afford ratio, to lend at an interest rate of 6 percent on a 30-year mortgage, and to require a 10 percent down payment. Based on this information, use th home affordability analysis form in Worksheet 5.3 to determine the highest-priced home the Harrisons can afford. Assume that closing costs are o of the down payment. Round the answer to the nearest dollar.
A young couple has saved up $12,000.00 for a down payment on a home. They are currently paying $1700.00 per month to rent a condo. The couple is pre-approved for a 20-year mortgage at 7.9% and their realtor estimates that they will need to set aside $3500.00 for taxes and other costs at the time of sale. Part: 0/4 Part 1 of 4 (a) What is the price of the most expensive home they can buy without raising their monthly housing payment? The maximum price of a home the couple can afford is $. X 3 Espanol M
please help me
--you live in the mobile home for four years, but your roommate also pays you $3,000 a year, paid to you at the beginning of each year. The cost of the mobile home is $15,000, paid immediately. At the end of four years, you can sell the mobile home for $9,000. You have no maintenance on the home because you were such a smart manager Using Present Value, what is the cost of your college housing (positive or negative), assuming an interest rate of 8%?
Jason Searcy buys a condominium for $96,200. He makes a 5% down payment, and pays these closing costs: property survey, $315; insect inspection, $190; legal fees, $525; and title insurance, $225. a. What is the down payment amount? b. What are the total closing costs? c. What is the total cash amount needed to buy the condominium?
The Hentys are considering buying a house and are researching the potential costs. Their adjusted gross income is $130,500. The monthly mortgage payment for the house they want would be $1,400. The annual property taxes would be $10,400. The homeowner’s annual insurance premium is $975. Will the bank lend them the money to purchase the house? Use a threshold of 28% front end ratio of monthly housing expenses to monthly gross income. YES- (21.6%)
Subject - account Please help me. Thankyou.
Gloria is planning on opening a cake shop. She has found a location that rents for $15,550 per year and it will cost her another $13,716 to furnish the shop and purchase all the necessary equipment. She plans on charging $20 for a cake and it will cost her $3 per cake for ingredients and $1.92 per cake for decorations and $1.59 per cake for the beautiful, colorful to-go boxes. What is the dollar breakeven point she will need to earn to cover her costs in the first year? Round to the nearest whole number.
John and Marsha are buying their first home. It has three bedrooms, two baths, and a two car garage. The total cost is $266,500. They have $35,000 for the down payments. They can finance the difference through their local credit union with a 30 year loan at 3.95%. What will their monthly payment be?
B. Study the following situation then answer the questions that follow: Mr. and Mrs. Cruz are planning to have their own home but have limited budget. They went to a home developer for some advice as to how the down payment will be produced for their chosen house and lot. This is the advice of the developer. To raise the amount of the down payment of the house and lot at the end of 5 years, you will invest P 23 000 at the end of each year for five years in an account that pays 8-% compounded annually. To find the down payment needed, give the values of the following: R = į(1) = m = t = j=, The situation above requires you to find amount (future value at the end of the term) F:
You own a home and are thinking of doing some home repairs. This year there is a tax credit of one-fifth the cost of materials for adding insulation and for replacing windows and external doors, up to a $4,000 tax credit maximum. a. You decide to add insulation to your attic which costs $2,800 in materials, and you install it yourself. What is the dollar amount of the tax credit? Tax credit $

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