Your group is deciding to purchase an investment property in an ideal location you prefer. The price range is between $250k and $500k. You would address the following issues before buying the property: 1) Decide the location and the specific real estate property you would like to buy (e.g., a single-family house or a condo). Please provide justification why the property is chosen, e.g., affordability, potential of price appreciation. Use some data to justify your selection, e.g., the housing price growth rate in the region. You could use the resource like zillow.com, etc. 2) Find out the mortgage rates for different properties and make a choice between 30/15-year mortgages and between FRM and ARM. You could use bankrate.com, etc. Please justify your decision. 3) Calculate monthly mortgage payment given the down payment you will make. Please consider prepayment in the analysis and provide information on closing expenses and subsequent maintenance costs as well. This will be a fixed 80% payment mortgage loan with 20% down payment. It means you will pay 20% down payment and finance 80% with mortgage. Please show your calculations. In the meantime, project the amount of rental you will be able to collect when you lease the property out. The rental period is the same as your mortgage period. Provide justification for your rental projection. Project the resale value of the property at the end of mortgage payment period. Please use some statistics to back up your numbers. zillow.com also provides rental price information. 4) Once you have the projected monthly mortgage payment, monthly rent income and the resale value of the property at the end of mortgage payment period and your down payment, you could discount them to the present value in Excel or using a financial calculator. The discount rate is the mortgage rate. The return on your investment property is calculated as (the sum of present value of inflow cash flow) / (the sum of present value of outflow cash flow) -1. 5) Next, assume you dont purchase an investment property, instead, you invest the same amount of money as your total investment in the house in stocks (for example, investing in the S&P500 index). You could use historical data of S&P500 index to calculate the index return, a.k.a. use the yearly S&P 500 before this year to calculate the yearly returns and average them within the sample period. The period of the expected index return is the same as your mortgage period. Please justify your decision. 6) Then assume you buy long term treasury bonds with the same amount of money of your investment in the house. The period of the expected bond return is the same as your mortgage period. (e.g., if the mortgage is 30-year mortgage, buy 30-year Treasury bond). Find the YTM of the Treasury bond. You could use the resource like wsj.com, etc. 7) Compare the return of the investment on real estate, stock index and Treasury bond. Please explain the under- or out-performance of your real estate investment comparing to other two investments. Please show your working clearly with spreadsheets back ups to justify your answer.