You just won $50,000. In order to minimize your taxes, you must buy a house. Choice A is a stunning 2-story brick home, 25 feet by 45 feet, costs $220,000, and requires a down payment of 22%. Choice B is a gorgeous 2-story colonial with a completely finished basement, 40 feet by 30 feet, costs $235,000, and requires a down payment of 25%. Choice C is beautiful 1-story penthouse with incredible city views, 50 feet by 45 feet, costs $275,000 and requires a down payment of 27%. 1) What is the square footage? (Use 1-story only; do not multiply by 2 for the 2-story homes) A: _____________ B: ________________ C: _________________

You just won $50,000. In order to minimize your taxes, you must buy a house. Choice A is a stunning 2-story brick home, 25 feet by 45 feet, costs $220,000, and requires a down payment of 22%. Choice B is a gorgeous 2-story colonial with a completely finished basement, 40 feet by 30 feet, costs $235,000, and requires a down payment of 25%. Choice C is beautiful 1-story penthouse with incredible city views, 50 feet by 45 feet, costs $275,000 and requires a down payment of 27%. 1) What is the square footage? (Use 1-story only; do not multiply by 2 for the 2-story homes) A: _ B: C: _____

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

Chapter13: Investing In Mutual Funds, Etfs, And Real Estate

Section: Chapter Questions

Problem 9FPE

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You just won $50,000. In order to minimize your taxes, you must buy a house. Choice A is a stunning 2-story brick home, 25 feet by 45 feet, costs $220,000, and requires a down payment of 22%. Choice B is a gorgeous 2-story colonial with a completely finished basement, 40 feet by 30 feet, costs $235,000, and requires a down payment of 25%. Choice C is beautiful 1-story penthouse with incredible city views, 50 feet by 45 feet, costs $275,000 and requires a down payment of 27%. 2) How much are the down payments? A: _____________ B: ________________ C: _________________
You just won $50,000. In order to minimize your taxes, you must buy a house. Choice A is a stunning 2-story brick home, 25 feet by 45 feet, costs $220,000, and requires a down payment of 22%. Choice B is a gorgeous 2-story colonial with a completely finished basement, 40 feet by 30 feet, costs $235,000, and requires a down payment of 25%. Choice C is beautiful 1-story penthouse with incredible city views, 50 feet by 45 feet, costs $275,000 and requires a down payment of 27%. 3) What percentage of the down payment do you still need? A: _____________ B: ________________ C: _________________
You are thinking about buying a house.You find one you like that costs $200,000. You learn that your bank will give you a mortgage for $160,000 and that you would have to use all of your savings to make the down payment of $40,000. You calculate that the mortgage payments, property taxes, insurance, maintenance, and utilities would total $950 per month. Is $950 the cost of owning the house? What important factor(s) have you left out of your calculation of the cost of ownership, if any?
The minimum down payment to obtain the best financing rate on a house is 20%. Assuming that John has set aside $27,000, and wants to take advantage of the best financing rate, what is the most expensive house he can purchase?
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.
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 Future Value, what is the cost of your college housing, assuming the 8% interest rate?
You are trying to evaluate the feasibility of purchasing a land. You plan to rent the plot of land to receive after-tax receipts of $2,500 per month. You are hoping to sell the land in the next ten years to receive after-tax proceeds of US$2.0 million to purchase a building containing at least four apartments. Assume the funds for purchasing the apartment will be drawn from your savings account which is currently earning 2% after taxes and that inflation rate is currently 5%. a) Identify the cash flows, their timing and the required rate of return applicable to calculating the maximum value you should pay for the land. b) Showing all calculations state if you should purchase the land for $1.6 million, justify your decision. What is the maximum price you should pay to acquire the single dwelling unit?
You currently pay $10,000 per year in rent to a landlord for a $100,000 house, which you are considering purchasing. You can qualify for a loan of $80,000 at 9% if you put $20,000 down on the house. To raise money for the down payment, you would have to liquidate stock earning a 15% return. Neglect other concerns, like closing costs, capital gains, and tax consequences of owning, and determine whether it is better to rent or own and explain why.
You currently pay $10,000 per year in rent to a landlord for a $100,000 house, which you are considering purchasing. You can qualify for a loan of $80,000 at 9% if you put $20,000 down on the house. To raise money for the down payment, you would have to liquidate stock earning a 15% return. Neglect other concerns, like closing costs, capital gains, and tax consequences of owning, and determine whether it is better to rent or own.
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%)
You currently don't have a car, but rent a car that's parked just outside your house whenever you need one. Your annual expenditure on rental cars is $2,600. You are now considering purchasing a car that would give you the same level of convenience as your current life style. The car costs $27,000 and can be sold for $5,000 after 10 years. You'd purchase the car with money from your savings account which always earns an interest rate of 6%. Assume that all cash flows occur at the end of each year (maybe because you drive much more around Thanksgiving and Christmas.
You have decided that you will sell off your house, which is currently valued at $300,000, at a point when it appreciates in value to $540,000. If houses are appreciating at an average annual rate of 5% in your neighborhood, for approximately how long will you be staying in the house?