Anthony found two feasible options for an apartment to rent for the next 2 years. Option A requires monthly rent of $ at the beginning of each month. Option B allows for end-of-month rent payments of $1,650 (same amenities as in optie uses a fairly high annual discount rate of 24% (sadly, he is also a high credit risk). Find th
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- Donald found two feasible options for an apartment to rent for the next 2 years. Option A requires monthly rent of $1,350 to be paid at the beginning of each month. Option B allows for end-of-month rent payments of $1,350 (same amenities as in option A). Donald uses a fairly high annual discount rate of 24% (sadly, he is also a high credit risk).Find the PV of the future rent payments for both options over the 2-year time period and explain which one Donald will prefer, if he bases his decision strictly on cash flow. (Round present value factor calculations to 5 decimal places, e.g. 1.25124 and final answers to 2 decimal places e.g. 5,125.36.)Click here to view the factor table Option A Option B Present value $enter a dollar amount rounded to 2 decimal places $enter a dollar amount rounded to 2 decimal places Donald would choose select an option , because he would effectively be paying select an…You are trying to purchase a condo and are looking at various options to finance the purchase.Your two best options are Option I a loan at 13.25 % (APR) interest compounded semi-annually. Or a 11.75 % (APR) interest loan compunded daily. Evaluate each loan structure and determine the Effecte Annual Rate (EAR) of each loan to determine what is the better deal.Refer the attached Case Study to solve, Enrico has planned to have $40,000 at the end of 10 years to place a down payment on a condo. Property taxes and insurance can be asmuch as 30% of the monthly principal and interest payment (i.e., for a principal and interest payment of $1,000, taxes and insurance would be an additional $300).What is the maximum purchase pricehe can afford if he’d like to keep his housing costs at $950 per month?
- You need a loan of $175,000 to buy a home. Calculate your monthly payments and total closing costs for each choice below. Briefly discuss how you would decide between the two choices. Choice 1: 30-year fixed rate at 7% with closing costs of $1400 and no points. Choice 2: 30-year fixed rate at 6.5% with closing costs of $1400 and 2 points. What is the monthly payment for choice 1? What is the monthy Payment for choice 2? What is the closing paymennt for choice 1? What is the closing paymennt for choice 2?You are thinking of renovating a basement apartment beneath your house, which you currently rent out for $521 per month. If you renovate the apartment, you could get $729 per month instead, starting next month. Assume renovations would cost $10,000, paid immediately, and would take very little time to complete so there’d be no delay in rental income. Assume monthly rental income would last for the foreseeable future (aka forever). If the applicable discount rate is 6% per year, what is the net present value (NPV) of the renovations? Round to the nearest cent.Assume you are preparing to move into a new neighborhood. You are considering renting or buying. Divide your team into two groups. Requirements Group 1 will analyze the renting option. A suitable rental is available for $500 per month, and you expect rent to increase by $50 per month per year. Prepare a schedule showing rent payments for the next 15 years. To simplify the problem, assume rent is paid annually. Using 5% as the discount rate, determine the present value of the rent payments. Round present value amounts to the nearest dollar. Group 2 will analyze the buying option. A suitable purchase will require financing $105,876 at 5%. Annual payments for 15 years will be $10,200 (annual payments assumed to simplify the problem). Calculate the present value of the payments. Additionally, using Excel with appropriate formulas, prepare a payment schedule with the following columns (year 1 is completed as an example): After each group has prepared its schedule, meet as a full team to…
- You are considering an option to purchase or rent a single residential property. You can rent it for $2,000 per month and the owner would be responsible for maintenance, property insurance, and property taxes. Alternatively, you can purchase this property for $200,000 and finance it with an 80 percent mortgage loan at 4 percent fixed-rate interest that will fully amortize over a 30-year period. The loan requires monthly payments. The loan can be prepaid at any time with no penalty. You have done research in the market area and found that (1) properties have historically appreciated at an annual rate of 2 percent per year, and rents on similar properties have also increased at 2 percent annually; (2) maintenance and insurance are currently $1,500.00 each per year and they have been increasing at a rate of 3 percent per year; (3) you are in a 24 percent marginal tax rate and plan to occupy the property as your principal residence for at least four years; (4) the capital gains exclusion…← You need a loan of $150,000 to buy a home. Calculate your monthly payments and total closing costs for each choice below. Briefly discuss how you would decide between the two choices. Choice 1: 20-year fixed rate at 6% with closing costs of $2900 and no points. Choice 2: 20-year fixed rate at 5.5% with closing costs of $2900 and 4 points. What is the monthly payment for choice 1? A (Do not round until the final answer. Then round to the nearest cent as needed.)You need a loan of $130,000 to buy a home. Calculate your monthly payments and total closing costs for each choice below. Briefly discuss how you would decide between the two choices. Choice 1: 30-year fixed rate at 7% with closing costs of $2100 and no points. Choice 2:30-year fixed rate at 6.5% with closing costs of $2100 and 3 points.
- After deciding to get a new car, you can either lease the car or purchase it with a three-year loan. The car you wish to buy costs $39,500. The dealer has a special leasing arrangement where you pay $108 today and $508 per month for the next three years. If you purchase the car, you will pay it off in monthly payments over the next three years at an APR of 6 percent, compounded monthly. You believe that you will be able to sell the car for $27,500 in three years. What is the cost today of purchasing the car? (Do not round intermediate calculations and round your answer to 2 decimal places, e.g., 32.16.) Cost of purchasing $ What is the cost today of leasing the car? (Do not round intermediate calculations and round your answer to 2 decimal places, e.g., 32.16.) Cost of leasing S What break-even resale price in three years would make you indifferent between buying and leasing? (Do not round intermediate calculations and round your answer to 2 decimal places, e.g., 32.16.) Break-even…Suppose you are given two loan options. The first one allows you to borrow money at 8.6% per year, compounded semi-annually. The other option allows you to borrow at 8.4% per year but compounded monthly. Calculate & explain which option is better from the borrower’s point of view. What is your conclusion from the answers ?Chuck Wells is planning to buy a Winnebago motor home. The listed price is $185,000. Chuck can get a secured add-on interest loan from his bank at 7.35% for as long as 60 months if he pays 15% down. Chuck's goal is to keep his payments below $4,300 per month and amortize the loan in 42 months. (a) Find Chuck's monthly payment (in $) with these conditions. (Round your answer to the nearest cent.) $ Can he pay off the loan and keep his payments under $4,300? Yes, under these conditions, Chuck will meet his goal. No, the monthly payment is too high. (b) What are Chuck's options to get his payments closer to his goal? (Select all that apply.) try to negotiate a higher interest rate make a higher down payment make a lower down payment try to bargain for a higher sale price try to negotiate a lower interest rate try to bargain for lower sale price (c) Chuck spoke with his bank's loan officer, who has agreed to finance the deal with a 6.85% loan if Chuck can pay 20% down. What will Chuck's…