Mr. Bailey has approached you regarding an opportunity he has to become a homeowner. Mr. Bailey has asked you to perform a financial analysis to determine if this would be a wise move to purchase the new condominium, or if he should continue to rent. You will create an Excel spreadsheet and a written Word document to explain the results for Mr. Bailey.

Currently he rents a downtown condominium for $2500 per month. A neighboring unit has recently gone onto the market for $500,000. Mr. Bailey feels that this would make a great investment for him and it would make sense to stop renting and purchase this unit. Mr. Bailey can put down 20% on the new unit. He will assume a 30-year mortgage for the condominium with a 6% APR. Mr. Bailey plans to remain in the condominium for 5 years and then sell and move to suburban Berkshire Farms.

Financial Details If Mr. Bailey purchases the condo, he will have additional monthly fees of:

$1000 HOA fee (maintenance, pool, health club) $300 property taxes $100 repairs

You have reviewed real estate trends and have determined that over 5 years the condo will appreciate approximately 3% per year. When he sells the condo, you estimate that he will pay 5% in commission and an additional $2,000 in closing costs.

show Excel formulas:

1. Mortgage payment with costs to Buy versus Rent (Sheet 1)
2. Amortization Schedule for the mortgage (Sheet 2)
3. Present value of the proceeds if he were to sell the property in 5 years (Sheet 3)