Question
a) You take out a 30-year mortgage to buy a house worth $361,000. The down payment is 7%, the interest rate is 4.2% and payments
a) You take out a 30-year mortgage to buy a house worth $361,000. The down payment is 7%, the interest rate is 4.2% and payments are monthly. How much interest will you pay over the life of this loan? Round to the nearest cent.
b) You will be receiving the following cashflows: $6,000 today, $6,000 in two years, and $5,000 in five years. If the appropriate discount rate is 10.6%, what is the present value of this cashflow stream? Round to the nearest cent.
c) You are interested in buying a house and renting it out. You expect to receive a monthly net income of $1,471 from rent. You then expect to sell the house for $259,000 at the end of 61 months. If your discount rate on this investment is 4% per year (compounded monthly), how much is this property worth to you today? Assume that you receive rent at the beginning of each month and you receive the first rent the same day you purchase the property. Round to the nearest cent.
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