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We have a 1,000,000 dollars in our savings and we are trying to decide if we should use our cash buy an apartment or go
We have a 1,000,000 dollars in our savings and we are trying to decide if we should use our cash buy an apartment or go with a mortgage fixed for five years. We only have these two options, no mixed option available. We know that the five year mortgage compound interest rate given by the banks today is 4.5%per year, meaning that we will pay $246,181.94 of interest by the end of the period, the interest will be divided equally in the five years of the mortgage. We checked in the powerful oracle of Google, that the projected inflation rate for Canada in the next five years is 3.5% a year average. The bank offers a 5% compound interest rate if we invest our money for five years with them giving $276,281.56 cad at the end of the period. The bank will pay 55,256.31 of our interests each year. I am going to save $12,000 a year as I won't pay rent, though the cost of owning the apartment will be $5,000 Cad a year today (this number will increase every year due to inflation). What I want you to tell me, is how much will the loan will cost me at the end of the period, we are trying to find the cost of a loan when I have a million dollars invested at 5% for five years. We have a 1,000,000 dollars in our savings and we are trying to decide if we should use our cash buy an apartment or go with a mortgage fixed for five years. We only have these two options, no mixed option available. We know that the five year mortgage compound interest rate given by the banks today is 4.5%per year, meaning that we will pay $246,181.94 of interest by the end of the period, the interest will be divided equally in the five years of the mortgage. We checked in the powerful oracle of Google, that the projected inflation rate for Canada in the next five years is 3.5% a year average. The bank offers a 5% compound interest rate if we invest our money for five years with them giving $276,281.56 cad at the end of the period. The bank will pay 55,256.31 of our interests each year. I am going to save $12,000 a year as I won't pay rent, though the cost of owning the apartment will be $5,000 Cad a year today (this number will increase every year due to inflation). What I want you to tell me, is how much will the loan will cost me at the end of the period, we are trying to find the cost of a loan when I have a million dollars invested at 5% for five years
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