Garry was told that it is always better to buy a house than to rent a house in Hong Kong because the house price in Hong Kong always goes up. If Garry wants to buy a $4 million house, he just needs to save a $400,000 down payment. Comment briefly.
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- 2. Jamal, who is adventurous, decides to take a year-long road trip Bangladesh to South Africa via Egypt. He buys a used car for Tk.500,000. At the end of the trip he sells the car for (the equivalent of) Tk.250,000. Furthermore, the benefit he derived from the car could be measured as Tk.300,000. (a) Calculate the internal rate of return. (b) Instead of going on the road trip, Jamal could have put his money in a bank account paying 12% per annum. In this case, was going on the road trip a wise monetary decision?2) Aaron is planning to buy an apartment. He earn a monthly income of RM40,000 and plans to put aside 25% of his salary. Aaron has set aside ready cash for the 20% down payment on his apartment and the remaining balance will borrow from the bank. The bank charges the nominal rate of 10% for a 20-year mortgage loan. What is the price of the most expensive apartment that Aaron can buy?A man decided to save to buy a new $30,000 car to take care of his family in his hometown.He has $12,000 today that can be invested at UBA bank . A. If the bank pays 6% interest compounded annually,how long would it take him before he has enough money to buy the car ? B.if he wants to visit his family in 4 years time at what annual rate should he invest the money to have enough to buy the car ?
- Deb and Rusty have just gotten married and wish to buy a home. They both work in Boston and have a combined income of $90,000. They found a modest starter house which they are buying for $350,000. 1. They plan to use their $40,000 is savings to cover the closing costs the bank will charge them, which are 1% of the amount they borrow from the bank. The rest of the savings will be used as a down payment. Determine the largest amount they can use for a down payment and still pay the closing costs. 2. Using the amount Deb and Rusty have to borrow from part 1, open Excel and create a 20-year amortization schedule, giving monthly payments for the amount they borrowed at a 4.5% annual interest rate. You must use the pmt function in Excel to compute the monthly payment. Title this worksheet Amortization. For your answer to this question write “See Excel Workbook”. 3. Use the amortization schedule to compute the total amount of interest they will pay to the bank over the 20 years. 4. Create a…Deb and Rusty have just gotten married and wish to buy a home. They both work in Boston and have a combined income of $90,000. They found a modest starter house which they are buying for $350,000.1. They plan to use their $40,000 is savings to cover the closing costs the bank will charge them, which are 1% of the amount they borrow from the bank. The rest of the savings will be used as a down payment. For example, if they borrow $330,000 using $20,000 for a down payment, the closing costs will be $3,300, which still leaves them some savings. Determine the largest amount they can use for a down payment and still pay the closing costs.Aina just got her driver license, and she wants to buy a new car cost for RM70,000. She has RM3,000 to invest as a lump sum today. Aina is a conservative investor and she only invests in safe products. After approaching different banks, she is offered the following investment opportunities. Union Bank’s savings account with an interest rate 10.8% compounded monthly. First State Bank’s savings account with an interest rate of 11.5% compounded annually
- Q8 Aya and Sakura would like to buy a house and their dream home costs $500,000. Their goal is then to save $50,000 for a down payment and then would take out a mortgage loan for the rest. They plan to put their monthly saved amount in a conservative mutual fund that has a track record of a 5.4% rate of return. To be sure they don’t go spending this money on other things, they are going to move it into their investment account at the beginning of each month. Their hope is to be able to buy this home in 7 years. What would their monthly savings amount have to be to reach this goal? What will be the total interest earned?You are thinking about buying a house.You find one you like that costs $200,000. You learn that your bank will give you a mortgage for $160,000 and that you would have to use all of your savings to make the down payment of $40,000. You calculate that the mortgage payments, property taxes, insurance, maintenance, and utilities would total $950 per month. Is $950 the cost of owning the house? What important factor(s) have you left out of your calculation of the cost of ownership, if any?Aina just got her driver license, and she wants to buy a new car cost for RM70,000. She has RM3,000 to invest as a lump sum today. Aina is a conservative investor and she only invests in safe products. After approaching different banks, she is offered the following investment opportunities: Union Bank's savings account with an interest rate 10.8% compounded monthly First State Bank's savings account with an interest rate of 11.5% compounded annually. i) Calculate how long it will take Aina to accumulate enough money to buy the car in each of the investment opportunities. ii) Explain which investment opportunity should be taken by Aina
- Mr. and Mrs. Bogdanovich want to buy a house that costs $585,000. They can only afford to pay $2200 per month for their mortgage payment, but they have cash on hand for a good down-payment. If they can get a 3.25%, 30-year mortgage, how much should they put down to keep their mortgage payments at $2,200? N= FV= I%= P/Y= PV= C/Y= PMT= End or Begin They can afford to finance ____________________________. So, they need to make a down payment of _________?______________.2. Wally wants to buy a house instead of renting, and has found a bank that is ready to loan him a sizable amount at 5% interest per year. He has identified a house that he would like to live in for 15 years. He thinks that with his carpentry skills he can easily upgrade the house to sell at the end of 15 years for $275,000. Presently, with the economy not doing so well, Wally believes that all he can afford to pay for the house every month-end is the rent that he presently pays his landlady of $750 per month. How much can he expect from the bank if he plans to use the entire amount that he will receive on selling the house after 15 years to make a balloon payment to the bank?You currently pay $10,000 per year in rent to a landlord for a $100,000 house, which you are considering purchasing. You can qualify for a loan of $80,000 at 9% if you put $20,000 down on the house. To raise money for the down payment, you would have to liquidate stock earning a 15% return. Neglect other concerns, like closing costs, capital gains, and tax consequences of owning, and determine whether it is better to rent or own and explain why.