Your company has determined it can and is willing to pay a monthly mortgage payment of $12,000 (per month) on a loan to buy its headquarters building. Assume that the lender is willing to lend 100% of the purchase price, so your company does need to put down any equity for the purchase. And, you have called the lender and they’ve told you they typically lend over 20 years at 4.75% per year interest. What is the maximum amount your company can afford to pay the seller for the building?
Your company has determined it can and is willing to pay a monthly mortgage payment of $12,000 (per month) on a loan to buy its headquarters building. Assume that the lender is willing to lend 100% of the purchase price, so your company does need to put down any equity for the purchase. And, you have called the lender and they’ve told you they typically lend over 20 years at 4.75% per year interest. What is the maximum amount your company can afford to pay the seller for the building?
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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Your company has determined it can and is willing to pay a monthly mortgage payment of $12,000 (per month) on a loan to buy its headquarters building. Assume that the lender is willing to lend 100% of the purchase price, so your company does need to put down any equity for the purchase. And, you have called the lender and they’ve told you they typically lend over 20 years at 4.75% per year interest. What is the maximum amount your company can afford to pay the seller for the building?
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Maximum amount the company can pay is present value of monthly payments
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