Question 4 5 You decide that you are not indifferent to either unit you love Unit 10Z Because you had an amazing Real Estate Finance Development class in graduate school, you realize that with some financial engineering, you can tweak the terms offered by the developers so that your monthly payment is the same or less than the monthly payment on Unit 3Q Explain three different ways you could manipulate the loan terms to reach the lower monthly payment without changing the actual asking price of $361,000 the questions are displayed on the image attached to this question question 4 5 is at the bottom of the image Following are a couple questions for you to work on, deliverable via BlackBoard at the beginning of next week's class In all cases, I encourage you to show your work to the extent that your answer is wrong but your logic and structure of the problem solving were correct, it will ensure partial credit Question 1 You open the official looking envelope and read, Congratulations, Ms Cerbone, you have been selected via the lottery process to purchase one of the affordable units at Alkandari Towers, a new residential community developed by Eklund Development Before you can finish the letter, your mind immediately veers off to what a great opportunity this could be With a purchase price of $250,000, as stated in the letter, you jump on your computer and start to investigate mortgages rates and terms at local banks A respected local bank, Chao Savings, offers a mortgage, based on you providing 20 of the purchase price (which you fortunately have after diligently saving for the last three years) as a down payment, with great terms of 6 75 for 30 years, compounded quarterly How much money do you have to set aside each month in order to fulfill your quarterly payment Extra credit if you can show the principal and interest schedule for the entire term, and indicate the principal balance at the end of year 7 Question 2 You have a choice between two investments Investment A provides a distribution to you of $2000 at the end of one year, paying 4 75 with no compounding The investment is contracted with a stable, local bank Maras Federated Bank that wisely did not originate subprime mortgages, or Investment B provides a distribution to you of $10,000 at the end of ten years, compounded annually, from a proven investment fund, Palacio Capital Corp , which although having a good track record is a riskier investment, akin you believe to investments paying 18 Assuming your sole focus is wealth maximization (and that you are neither a widow nor an orphan and hence able to invest in sophisticated investments as defined by the SEC) and you are indifferent to various risk and liquidity levels, which investment do you choose Question 3 You have inherited a vacation home, debt free, on Baker Island (just outside Boston Harbor) from your dear old great aunt An appraisal by Wong Appraisers indicates it has a value today of $150,000 Because you are nervously planning for your children's education, you think that perhaps you and your family will enjoy the home for 8 years, and then sell it to pay for college The appraiser adds that, with reams of supporting information, homes on another local island, Wigen Island, consistently appreciate about 3 75 per year You decide that is a fair and reasonable expectation Without factoring in inflation, what is the home worth at the end of 8 years Question 4 You have been looking at the fine new condominiums developed by Pria Pinto Development, a purveyor of high quality residential housing throughout Eastern Massachusetts They have two units in a development that interest you 1 After feverish negotiations, they are willing to accept a bid of $318,000 on Unit 30, and you have already received a commitment letter from Walker Five and Dime Savings Bank at the following terms No points or fees, 10 Down Payment, 7 99 rate, 20 year term, compounded monthly 2 Alternatively, they are providing special terms to sell a larger unit that has been on the market for awhile Unit 102, with exactly the same finishes and amenities (just larger), and the developers are providing attractive special terms No points or fees, sales price of $361,000, 5 Down Payment, 1 375 rate, 12 year term, compounded monthly Being the youngest associate at the hot architectural firm of LV Lydon Villalobos Design, you have saved enough money that you can afford the down payment for either option You are indifferent to either unit you want to have the lowest monthly payment possible What are the respective monthly payments for both Units, and which do you choose Question 4 5 You decide that you are not indifferent to either unit you love Unit 10Z Because you had an amazing Real Estate Finance Development class in graduate school, you realize that with some financial engineering, you can tweak the terms offered by the developers so that your monthly payment is the same or less than the monthly payment on Unit 30 Explain three different ways you could manipulate the loan terms to reach the lower monthly payment without changing the actual asking price of $361,000

Question

Question   4 5 You decide that you are not indifferent to either unit    you love Unit 10Z  Because you had an amazing Real Estate Finance   Development class in graduate school, you realize that with some financial engineering, you can tweak the terms offered by the developers so that your monthly payment is the same or less than the monthly payment on Unit 3Q  Explain three different ways you could manipulate the loan terms to reach the lower monthly payment without changing the actual asking price of $361,000  the questions are displayed on the image attached to this question  question 4 5 is at the bottom of the image  Following are a couple questions for you to work on, deliverable via BlackBoard at the beginning of next week's class  In all cases, I encourage you to show your work to the extent that your answer is wrong but your logic and structure of the problem solving were correct, it will ensure partial credit  Question  1  You open the official looking envelope and read,  Congratulations, Ms  Cerbone, you have been selected via the lottery process to purchase one of the affordable units at Alkandari Towers, a new residential community developed by Eklund Development   Before you can finish the letter, your mind immediately veers off to what a great opportunity this could be  With a purchase price of $250,000, as stated in the letter, you jump on your computer and start to investigate mortgages rates and terms at local banks  A respected local bank, Chao Savings, offers a mortgage, based on you providing 20  of the purchase price (which you fortunately have after diligently saving for the last three years) as a down payment, with great terms of 6 75  for 30 years, compounded quarterly  How much money do you have to set aside each month in order to fulfill your quarterly payment  Extra credit if you can show the principal and interest schedule for the entire term, and indicate the principal balance at the end of year 7  Question   2  You have a choice between two investments  Investment A provides a distribution to you of $2000 at the end of one year, paying 4 75  with no compounding  The investment is contracted with a stable, local bank   Maras Federated Bank   that wisely did not originate subprime mortgages, or Investment B provides a distribution to you of $10,000 at the end of ten years, compounded annually, from a proven investment fund, Palacio Capital Corp , which although having a good track record is a riskier investment, akin you believe to investments paying 18   Assuming your sole focus is wealth maximization (and that you are neither a widow nor an orphan and hence able to invest in  sophisticated investments  as defined by the SEC) and you are indifferent to various risk and liquidity levels, which investment do you choose  Question  3 You have inherited a vacation home, debt free, on Baker Island (just outside Boston Harbor) from your dear old great aunt  An appraisal by Wong Appraisers indicates it has a value today of $150,000  Because you are nervously planning for your children's education, you think that perhaps you and your family will enjoy the home for 8 years, and then sell it to pay for college  The appraiser adds that, with reams of supporting information, homes on another local island, Wigen Island, consistently appreciate about 3 75  per year  You decide that is a fair and reasonable expectation  Without factoring in inflation, what is the home worth at the end of 8 years  Question  4 You have been looking at the fine new condominiums developed by Pria Pinto Development, a purveyor of high quality residential housing throughout Eastern Massachusetts  They have two units in a development that interest you  1  After feverish negotiations, they are willing to accept a bid of $318,000 on Unit 30, and you have already received a commitment letter from Walker Five and Dime Savings Bank at the following terms  No points or fees, 10  Down Payment, 7 99  rate, 20 year term, compounded monthly 2  Alternatively, they are providing special terms to sell a larger unit that has been on the market for awhile  Unit 102, with exactly the same finishes and amenities (just larger), and the developers are providing attractive special terms  No points or fees, sales price of $361,000, 5  Down Payment, 1 375  rate, 12 year term, compounded monthly Being the youngest associate at the hot architectural firm of LV  Lydon Villalobos Design, you have saved enough money that you can afford the down payment for either option  You are indifferent to either unit   you want to have the lowest monthly payment possible  What are the respective monthly payments for both Units, and which do you choose  Question   4 5 You decide that you are not indifferent to either unit   you love Unit 10Z  Because you had an amazing Real Estate Finance   Development class in graduate school, you realize that with some financial engineering, you can tweak the terms offered by the developers so that your monthly payment is the same or less than the monthly payment on Unit 30  Explain three different ways you could manipulate the loan terms to reach the lower monthly payment without changing the actual asking price of $361,000

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Question # 4.5 You decide that you are not indifferent to either unit -- you love Unit 10Z. Because you had an amazing Real Estate

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