9. UW business school graduate Brenda is moving back to Seattle, and is deciding between two alternative condominium purchases. She considers the two options equally desirable as places to live, but they have different prices and different financing terms. The Fremont condo has a price of $64,000, and the sellers have agreed for Brenda to finance $54,000 of the amount with a 9 year zero interest loan- they merely require a $10,000 down payment and 9 successive yearly payments of $6000. The Northgate condo has a price of $40,000, but this amount must be paid up front in cash. Brenda currently has $75,000 in her bank account, so she can afford the cash requirement of either purchase. Assume that her bank pays her 10% (effective) interest rate every year (i.e. her bank pays her once every year at 10% rate). Also, Brenda expects that no matter which condominium she decides to buy, she will be able to sell that condo for the same price she pays for it after 10 years when Brenda expects to move out. There are no taxes of any kind to consider in this question. a) If you were Brenda, which condo will you purchase? Prove your conclusion by numbers. b) Brenda's rich cousin "Short Selling Shortie" says to Brenda, "It is silly to get involved in fancy financing terms like those in Fremont. You should just buy the condo with the lower price and let me loan you the money for your purchase at standard market rates, which is 10% APR. Then you can have regular reasonable MONTHLY mortgage payments like everyone else." 1. Critically evaluate Brenda's cousin's comments on "fancy financing terms" and his loan terms to Brenda. No calculation required. 2. What would Brenda's monthly mortgage payment be if she followed "Short Selling Shortie's" advice to take a 9 year loan with monthly payment and 10% APR