Question
Finance 1: Your local bank has offered you a 25 year loan for $1,180,000 with annual payments at 6%. What will the annual payments for
Finance 1: Your local bank has offered you a 25 year loan for $1,180,000 with annual payments at 6%. What will the annual payments for the bank loan be?
Finance 2: Your neighbour has also offered to finance the sale. They dont require a down payment from you. They want repayment in 20 years, but will let you make annual payments at 4% interest. What will the annual land payments be?
Use net present value analysis (5% discount rate) to determine which financing offer is the better deal. (Hint: Dont forget to include the down payment you need to make for the bank loan.)
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