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Ella has just turned 20 years old. In exactly five years, she will take over Uncle Sverre's apartment Fynd all. The apartment's market value is
Ella has just turned 20 years old. In exactly five years, she will take over Uncle Sverre's apartment Fynd all. The apartment's market value is currently NOK 8 million, and the value is expected to increase on average 5% per. Years in the next five years. To buy out the other heirs, Ella wants need to loan finance 70% of the market value at the time of acquisition. The repayment will made in accordance with the terms of an ordinary annuity loan with monthly payment installments of 4% nominal, arrears interest per. Years and 20 years repayment period.
Show how to calculate the answers to the questions below: (a) How much equity does Ella need at the time of acquisition? (b) What is the monthly amount required to repay the loan in full after 20 years? Assume that the loan shall be operated as an ordinary annuity loan with arrears of interest.
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