An appraiser is looking for comparable sales and finds a property that recently sold for

$$215,000.$ She finds that the buyer was able to assume the seller's fully amortizing

mortgage, which had monthly payments based on a $7$ percent interest. The balance of the

loan at the time of sale was $$145,000$ with a remaining term of $15$ years $($monthly payments$).$

The appraiser determines that if a $$145,000$ loan was obtained on the same property,

monthly payments at the market rate for a $15-$year fully amortizing loan would have been $8$

percent with no points.

Required:

a$.$ Assume that the buyer is expected to benefit from the interest savings on the assumable

loan for the entire loan term. What is the cash equivalent value of the property?

b$.$ What is the cash equivalent value of the property if you assumed that the buyer is only

expected to benefit from interest savings for five years because he would probably sell or

refinance after five years?

Answer is complete but not entirely correct.

Complete this question by entering your answers in the tabs below.

Required $A$

Required B

What is the cash equivalent value of the property if you assumed that the buyer only expected $t$

for five years because he would probably sell or refinance after five years? $($Do not round interm

your final answer to $2$ decimal places.$)$