You have the option of buying a property or just leasing it, in the first case you must pay 20% of the property today and pay a mortgage loan for 20 years for 80% remaining, the credit has a cost of 6.0% in annual US cash, compounded monthly, Today the property has a value of 10,000 US and its value increases by 2% per year in real terms. In the case of leasing it, you must pay 75% of the value of the fee. Your rate discount is 5% in nominal terms. to. Question - 1  Calculate the discount rate that makes you indifferent between the two alternatives

Q: ou borrow $2mn at an interest rate of 5% per year to purchase a real estate property for the cost of…

A: Principal = $2 millioninterest rate = 5%Cost of real estate = $2.5 millionAmount borrowed=$2.0…

Q: ou want to buy a property in the city of Vancouver and the purchase price is $700,000. You will be…

A: Mortgage loans make buying a home easy because loans are paid in monthly installments that carry…

Q: You are ready to buy a house and you have $75,000 for a down payment and closing costs. Closing…

A: Here, Amount for Down Payment and Closing Cost is $75,000 Closing Cost id 4.5% of Loan Value Annual…

Q: a) How much is the loan amount going to be? b) What will your monthly payments be? c) How much…

A: Loan payments can be paid off in periodic payments. To understand the periodic payments the loan…

Q: Your firm has taken out a $480,000 loan with 8.1% APR (compounded monthly) for some commercial…

A: The loans are paid the monthly payments that carry the payment for interest and the payment for the…

Q: You want to buy a $210,000 home. You plan to pay $10500 as a down payment, and take out a 30 year…

A: The loan amount would be the remaining amount after deducting the down payment from the purchase…

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Q: Using a financial calculator, You can buy property today for $2.1 million and sell it in 6 years for…

A: Given information,Purchase price:  millionSale price:   millionNumber of years:  yearsInterest rate:…

Q: You are ready to buy a house, and you have $30,000 for a down payment and closing costs. Closing…

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Q: ou want to buy a $224,000 home. You plan to pay 15% as a down payment, and take out a 20 year loan…

A: Monthly payments on an amortized loan refer to a fixed amount of money that a borrower pays each…

Q: Suppose you want to purchase a home for $525,000 with a 30-year mortgage at 5.44% interest. Suppose…

A: Note: No intermediate rounding is done for successive parts as well.   Value of house = $525,000…

Q: You are considering the purchase of a $140,000 home and making a 20% down payment. You can obtain a…

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Q: Your firm has taken out a $535,000 loan with 8.6% APR (compounded monthly) for some commercial…

A: Loan (L) = $535000 r = 8.6% per annum = 0.7167% per month n = 15 years = 180 months M = Monthly…

Q: You bought a house worth ​$326,000. You paid​ 25% of the purchase price in cash and arranged a ​30…

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Q: where a $70,000 loan could be assumed at a 9 percent rate with a remaining term of 15 years and…

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Q: You want to purchase an office building in Brooklyn that is expected to generate $475554 net…

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Q: You are considering the purchase of a condominium to use as a rental property. You estimate that you…

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Q: You would like to buy a house for $850,000. You put $180,000 down, and then get the rest at 7.5%,…

A:

Q: You want to buy a $226,000 home. You plan to pay 5% as a down payment, and take out a 30-year loan…

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Q: Your company has determined it can and is willing to pay a monthly mortgage payment of $12,000 (per…

A: Maximum amount the company can pay is present value of monthly payments

Q: You’ve decided to buy a house that is valued at $1 million. You have $250,000 to use as a down…

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Q: The price of a condominium is $127,000. The bank requires a​ 5% down payment and one point at the…

A: Required down payment = $127,000 * 5% = $6350 Amount of Mortgage = $127000 * 95% = $120650 One point…

Q: You borrow $2mn at an interest rate of 5% per year to purchase a real estate property for the cost…

A: Principal = $2 millioninterest rate = 5%Cost of real estate = $2.5 milliona) Value of Property =…

Q: You have just purchased a new warehouse. To finance the purchase, you've arranged for a 30-year…

A: mortgage value = n = 30 x 12 = 360

Q: The sales price is $150,000. The buyer is obtaining a 90% conventional loan for 15 years. The factor…

A: Sale price = $150000 Down payment = 90%*$150000 = $135000 Factor of 9.28 means that $9.28 is given…

Q: You are ready to buy a house and you have $35,000 for a down payment and closing costs. Closing…

A: Excel formula.

Q: Assume you are purchasing an income-producing property for $10,000,000. The estimated NOI in the…

A: Acquisition cost = $10,000,000NOI = $600,000Annual interest rate = 4%Debt coverage ratio =…

Q: You have just purchased a new warehouse. To finance the purchase, you've arranged for a 30-year…

A: Mortgage period = 30 yearsPurchase price = $2,700,000Mortgage amount = 80% of purchase priceMonthly…

Cost of Credit

The cost of credit is an extra amount that the borrower has to pay besides the loan amount. These credit charges may vary from loan to loan. The cost of credit includes interest charges, maintenance charges, and arrangement charges. Some of the costs are mandatorily collected by the lender based on the loan amount and tenure of the loan. The cost of credit is also called finance charges of the credit.