Home 1: Stand-Alone House Home 2: Condominium Purchase Price: $198,000 Future Value: $229,000 Features: ► Two bedrooms, 1 bathroom Large fenced yard ▸ New roof installed last year ► Single-car garage ► You must drive at least 10 minutes to reach work, school, shopping, and entertainment. ► City bus stops are 10 minutes away ► Near an elementary school, a dog park, and walking trails Purchase Price: $256,000 Future Value: $390,000 Features: ► Two bedrooms, 2 bathrooms ▸ Shared garden area ► You must pay a monthly maintenance fee of $200 in addition to your regular mortgage payment. ► Covered parking is free for residents. ► The condo is located within walking distance of school, work, shopping, and entertainment areas. ▸ Sheltered city bus stop at the corner Home 3: House on the Water Purchase Price: $231,000 Future Value: $255,000 Features: ▸ One bedroom, 1.5 bathroom ► Private yard with existing garden ▸ New windows installed 3 years ago ▸ No garage ► You must drive at least 20 minutes for work, school, shopping, and entertainment ▸ Open city bus stop is 5 minutes away ► Local grocer will deliver to you for no additional charge ▸ This house has been known to flood when the water is high

Pfin (with Mindtap, 1 Term Printed Access Card) (mindtap Course List)

7th Edition

ISBN:9780357033609

Author:Randall Billingsley, Lawrence J. Gitman, Michael D. Joehnk

Publisher:Randall Billingsley, Lawrence J. Gitman, Michael D. Joehnk

Chapter5: Making Automobile And Housing Decisions

Section: Chapter Questions

Problem 3FPE

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Related questions

Question

Calculate the appreciation rate of each home. Show your work. Then, write at least two paragraphs that discuss which home you’d like to buy, based on the rate at which it will appreciate and its features.

In paragraph 1, include each appreciation rate. Why do you think the appreciation rates are different for each home? Explain your reasoning. In paragraph 2, compare and contrast the features of the homes, based on what you would be looking for in a house. Be sure to state which home you would want to buy.

(If you buy Home 1, you think that you will own it for 3.5 years, but if you buy Home 2, you will likely own it for 7.25 years. You’re unsure how long you might stay in Home 3, but you think it would be about 4.75 years.)

Home 1:
Stand-Alone House
Home 2:
Condominium
Purchase Price: $198,000
Future Value: $229,000
Features:
► Two bedrooms, 1 bathroom Large fenced yard
▸ New roof installed last year
► Single-car garage
► You must drive at least 10 minutes to reach work, school, shopping, and entertainment.
► City bus stops are 10 minutes away
► Near an elementary school, a dog park, and walking trails
Purchase Price: $256,000
Future Value: $390,000
Features:
► Two bedrooms, 2 bathrooms
▸ Shared garden area
► You must pay a monthly maintenance fee of $200 in addition to your regular mortgage
payment.
► Covered parking is free for residents.
► The condo is located within walking distance of school, work, shopping, and entertainment
areas.
▸ Sheltered city bus stop at the corner

Home 3:
House on the Water
Purchase Price: $231,000
Future Value: $255,000
Features:
▸ One bedroom, 1.5 bathroom
► Private yard with existing garden
▸ New windows installed 3 years ago
▸ No garage
► You must drive at least 20 minutes for work, school, shopping, and entertainment
▸ Open city bus stop is 5 minutes away
► Local grocer will deliver to you for no additional charge
▸ This house has been known to flood when the water is high

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