!? You're a 30-year-old professional earning $75,000annually and you're considering buying your firsthome in a mid-sized city. The average home price inyour target neighborhood is $300,000, and you'vemanaged to save $30,000 for a down payment. Yourmonthly expenses, including rent, currently total$2,500, and you have $10,000 in student loan debt at5% interest, with minimum monthly payments of$200. Your credit score is 720, and you've been pre-approved for a 30-year fixed-rate mortgage at 4.5%interest. You're torn between buying a home now orcontinuing to rent while saving more and payingdown your student debt. Given your financialsituation, current market conditions, and long-termfinancial goals, should you proceed with buying ahome or continue renting?

Explanation of Mortgage Payment:A mortgage payment is the monthly amount you pay toward the loan you…

Answered: You're a 30-year-old professional…

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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You are thinking of buying a house beside the College which you will rent to students. You expect to receive $1,125 a month in rental income. Your real estate agent estimates that you will be able to sell the property for $225,000 at the end of 24 months. You'd like a return of at least 0.4% per month. What is the most that you should pay for the house, assuming that you will purchase the house today and receive the first (beginning of month) rental payment today. What is the most that you should pay for the property today? (Round to the nearest dollar.)
You decide to earn extra money during your Engineering program by running an uber service. You purchase a car for $60,000, which you expect to sell for $18,000 at the end of the 6-year degree. You expect annual costs for insurance, maintenance and other expenses to total $7000 per year. You project to have approximately 20 customers per shift, who you will drive 8km on average. You plan on driving 80 days each year. What is the levelized cost per km of driving? MARR = 6%. The answer is within 5 cents of which of the following? Question 11 options: 1.00 1.10 1.20 1.30 None of the above
1. You are 25, recently graduated, and have a job paying you $40000 a year. a) You want to take a trip to Rome next summer and want to save $4000 between now (January 1) and June 1 of next year (18 months). You have an account that will earn 6% annually. How much will you need to save every month to get to the desired amount? b) You think it might be a good time to buy a condo instead of renting. You want to borrow $140,000 at 3.7% for 30 years. What will your monthly payments be? c) You plan to take off two years of work starting in five years to complete your master's degree. If you want to have $37000 in an account that you can live off, how much do you have to put aside monthly now in an account paying 5% per year? d) You want to retire in 45 years with $1 million in the bank. You think you can get an average of 5.2% annually in an investment account. How much will you have to save every year to get to $1 million? e) If your million dollar account continues to earn 5.2% a year, how…
You are staying in Raleigh! With a post-graduation career in the Triangle, you need a place to live. A move-in ready townhouse is $300,000 using a 20-year mortgage and putting 10% as a cash down payment (i.e., you only need to finance 90% of the purchase price). The current interest rate you have available is a 4.25% APR compounded monthly. "Closing costs," that is, transaction costs associated with purchasing the house, are 2% of the purchase price. Suppose, you expect home values in Raleigh to continue to grow at 2.5% per year. Finally, if you were to sell the home, you would realize 5% in fees (costs of a realtor and associated transaction costs). Alternatively, you can rent an apartment for $1,900 per month. There is a $3,000 security deposit, due at the time you move in. Assume that the cost of the rental increases 15% every five years. Mortgage and rental payments are made at the end of every month. Assuming you will live in this location for 10 years (i.e., you sell the house or…
You run a school in Florida. Fixed monthly cost is $6,000.00 for rent and utilities, $6,105.00 is spent in salaries and $1,241.00 in insurance. Also every student adds up to $102.00 per month in stationary, food etc. You charge $625.00 per month from every student now. You are considering moving the school to another neighborhood where the rent and utilities will increase to $11,084.00, salaries to $6,473.00 and insurance to $2,057.00 per month. Variable cost per student will increase up to $187.00 per month. However you can charge $1,030.00 per student. At what point will you be indifferent between your current mode of operation and the new option? Submit Answer format: Number: Round to: 0 decimal places.
You are thinking of purchasing a house. The house costs $354,000. You have $45,000 in cash that you can use as a down payment on the house, but you need to borrow the rest of the purchase price. The bank is offering a 25-year mortgage that requires annual payments and has an interest rate of 6% per year. What will be your annual payment if you sign this mortgage?
You need a new car and the dealer has offered you a price of $20,000, with the following payment options: (a) pay cash and receive a $2,000 rebate, or (b) pay a $5,000 down payment and finance the rest with a 0% APR loan over 30 months. But having just quit your job and started an MBA program, you are in debt and you expect to be in debt for at least the next 2 ½ years. You plan to use credit cards to pay your expenses; luckily you have one with a low (fixed) rate of 14.43% APR (monthly). Which payment option is best for you? Your monthly discount rate is%. (Round to four decimal places.)
You need a new car and the dealer has offered you a price of $20,000, with the following payment options: (a) pay cash and receive a $2,000 rebate, or (b) pay a $5,000 down payment and finance the rest with a 0% APR loan over 30 months. But having just quit your job and started an MBA program, you are in debt and you expect to be in debt for at least the next 2 ½ years. You plan to use credit cards to pay your expenses; luckily you have one with a low (fixed) rate of 15.49% APR. Which payment option is best for you? What is the monthly discount rate ______ For you, what is the present value of option (b) is $_______
You need a new car and the dealer has offered you a price of $20,000, with the following payment options: (a) pay cash and receive a $2,000 rebate, or (b) pay a $5,000 down payment and finance the rest with a 0% APR loan over 30 months. But having just quit your job and started an MBA program, you are in debt and you expect to be in debt for at least the next 2 ½ years. You plan to use credit cards to pay your expenses; luckily you have one with a low (fixed) rate of 15.00% APR (monthly). Which payment option is best for you? Question content area bottom Part 1 Your monthly discount rate is enter your response here%. (Round to four decimal places.)
You decide that you need $47,000 in 3 years to make a down payment on a house. You plan to make annual fixed deposits to achieve your goal. If the interest rate is 2.5%, how much should be deposited each time? Hint use the Financial Function “PMT” to solve for the payment, and PV will be zero. You owe $25,000 to your parents. You promise to make 10 annual payments of $3,000 to settle your debt. What interest rate are your parents charging (estimated up to 2 decimal places), if you make the 10 annual payments beginning one year from now? Hint use the Financial Function “RATE”. Note if you need help use the “Help on this function” feature. This help will include an example for you to follow. You are offered an investment that will pay $14,000 per year for 17 years, beginning one year from now. If you feel that the appropriate discount rate is 3.4%, what is the investment worth to you today? Your grandparents offered you some money via the following options. Assuming an annual interest…
Draw the time line for this problem. Write out the formulation for each part: You decide to use $10,000 from your combined accounts to pay down your student loan, and use the rest to make a down-payment on a two bedroom condominium in a building where a few of your friends have already bought places. You negotiate a purchase price of $62,549. You get a 30 year mortgage for the balance, after taking away the down payment, at 4%. What are your monthly payments going to be?

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