Suppose you can get a loan with a below-market interest rate from a home builder. The fully
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Question:
Suppose you can get a loan with a below-market interest rate from a home builder. The fully amortizing FRM loan has 4% interest rate, 30 year amortization, $240,000 loan amount. If the home usually sells for $300,000, at what price should the homebuilder sell the home to you in order to earn a market return of 4.5% on the loan? Assume you will hold the loan for 30 years.
A.$313,864
B.$320,489
C.$305,689
D.$329,092
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