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Conor is comparing two potential housing options. Conor plans to stay in the home for 4 years, after which he plans to move again.
Conor is comparing two potential housing options. Conor plans to stay in the home for 4 years, after which he plans to move again. Conor earns 12% annually on his other investments. He determines the following information about each option: OPTION 1: Purchase a home Purchase a $270,000 home with a 30-year fixed mortgage Loan amount = $270,000 (100% financing) Annual mortgage interest rate = 6.00% Monthly mortgage payments = $1,618.79 Additional monthly costs (insurance, taxes, maintenance) = $350.00 Real estate growth rate = 5% annually es S What is the present value of Option 1 assuming the home is expected to increase in value 5% annually over the 4 years, and Conor earns 12% annually on his other investments? Make your answer a positive number, and round to the nearest dollar if necessary.
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