The Marconi familycomprising Mrs. Marconi, aged 40, Mr. Marconi, aged 38, and their three young children relocated to Barcelona in January 2020 when Mrs. Marconi received a job offer from a leading investment banking giant. They rented a three-bedroom condominium in Barcelona for 2.000 per month, which included parking and condominium fees. While renting made life easy, the Marconi family began weighing the pros and cons of purchasing a flat, in the same building, that became available in June 2020. In the past three years, the real estate market had softened somewhat, and the cost of the flats were stable. The idea of home ownership as a form of pension investment appealed to the couple. The monthly rents could be used for mortgage payments instead. While searching for the right property they found a nice apartment with 200 square meters, very close to Diagonal-Numancia, one of the best locations of the city. The apartment was owned and had been promoted by a state-owned construction company and was offering two alternatives: Option A: renting the apartment with a perpetual contract, meaning forever. The Marconi family thought that could be a good solution for them. The family was very happy living in that area, and they had the chance to live there forever at an offered price of 1,600 EUR the first month, and the rent price will be growing by a 0.1% monthly. At the same time, they were not forced to ask for a loan, which represented a heavy burden off the Marconis. Option B: consisted in acquiring the property with a mortgage scheme for 40 years. The total price of the apartment is 800.000. The family can pay an initial down payment of 200,000 EUR and the rest (600,000 EUR) to be paid in constant monthly payments with an annual interest rate of a 2.4% compounded monthly.

Mrs. Marconi establishes the maximum amount they can pay monthly as 2.000

1)In case of taking option A, what is the amount of the monthly payment the Marconi family should pay in 40 years (in month 480)? (only the amount to be paid that month) Show the calculations and explain why.

2)In case of taking option A, how much money will have the Marconi family paid in total after 40 years?

3)If the Marconi family decides to leave Barcelona in 10 years, back to Italy, what is the present value of the rental contract offered by the owner as option A? (take the 2.4% compounded monthly as the interest/discount rate)

4) If Mrs. Marconi decides to buy the apartment, and accepts Option B, what will be the amount of each monthly payment to be done during the next 40 years?