Question
SHOW CLEAR WORK ON EXCEL An investor has $60,000 to invest in a $280,000 property. He can obtain either a $220,000 loan at 9.5 percent
SHOW CLEAR WORK ON EXCEL
An investor has $60,000 to invest in a $280,000 property. He can obtain either a $220,000 loan at 9.5 percent for 20 years or a $180,000 loan at 9 percent for 20 years and a second mortgage for $40,000 at 13 percent for 20 years. All loans require monthly payments and are fully amortizing.
a. Whichalternativeshouldtheborrowerchoose,assuminghewillownthepropertyforthefull loan term?
b. Would your answer change if the borrower plans to own the property only five years?
c. Would your answers to (a) and (b) change if the second mortgage had a 10-year term?
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Snap Judgment When To Trust Your Instincts When To Ignore Them And How To Avoid Making Big Mistakes With Your Money
Authors: David E. Adler
1st Edition
0137147783,0137037090
