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Problem 3 (Weight 4) Remember to show all your calculations. Just an answer or showing how you used the calculator, will not suffice. The value
Problem 3 (Weight 4) Remember to show all your calculations. Just an answer or showing how you used the calculator, will not suffice. The value of a flat is 4 000 000 kr. As a result of a long-lasting depression, housing prices and the value of the flat decrease at annual rate of 10%. For the sake of simplicity, we assume that the whole value depreciation occurs at the end of each year. a) What is the value of the flat after 5 years? How long will it take for the value of the flat to be halved? b) You have borrowed 3 000 000 kr. to buy a flat. The loan is an annuity loan over 30 years with fixed annual payments, first payment one year after receiving the loan. The annual interest rate is 2%. c) What is size of the annual payment? Immediately after the fifth payment you decide to down pay the remainder of the loan. What is the size of the remainder of your loan at this point
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