Question
Mr and Mrs Smith just saw their dream house which is valued at AED 7,500,000 in Meadows 1. They earn AED 28,000 and AED 24,000
Mr and Mrs Smith just saw their dream house which is valued at AED 7,500,000 in Meadows 1. They earn AED 28,000 and AED 24,000 per month respectively. First Abu Dhabi Bank is willing to offer them a rate of 2% per annum, and a maximum loan of 80% of their value of house.
(a) How long it will take the family to pay the loan if they contribute half of their monthly salary towards the monthly loan repayment? Show your workings.
(b) Will it take longer for the family to pay off the loan if they contribute 55% of their monthly salary towards their monthly loan repayment? Show your workings.
(c) What do you expect will happen to the value of the villas in 2021, assuming you are living in UAE? Explain your answer.
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Quantitative Investment Analysis
Authors: Richard A. DeFusco, Dennis W. McLeavey, Jerald E. Pinto, David E. Runkle
3rd edition
111910422X, 978-1119104544, 1119104548, 978-1119104223
