A couple recently graduated CSUN and both earned master's degrees. They got married and found jobs in LA County. They have decided to purchase their first home or condominium, since they recently received a $50,000 family inheritance. In addition, the annual appreciation in the market is right now 6% per year and is anticipated to stay that way in the foreseeable future.

They both have a gross annual income of $180,000. However, they both have student loans and their minimum monthly payments are $1,000 per month EACH.

They have budgeted the following expenses.

- Utilities (water, trash, gas, electricity) at $500 per month

- HOA at $250 per month

- Cell phones, telephone, cable tv, etc. - $250 per month

- Two car payments, car insurance, gas gasoline at $950 EACH.

- Based upon their existing spending, they will need about $2,500 total for food, groceries, clothing, travel, etc.

- Homeowners insurance is estimated at $1,080 per year.

- Property taxes are estimated at 1.25% of the purchase price of the condominium / house

They qualify for a mortgage program which requires a minimum down payment of 10% of the purchase price; this program has a mortgage interest rate of 3.75%, amortized over 30 years.

What is the purchase price of the condominium / house they can afford ?

If they sell the condominium at the end of year 5, how much did their equity increase by ?

* Assuming no sale commissions and no closing costs.

please show your work / calculations