You are thinking about buying a rental property. Because of the difficulty getting a loan, you are going to pay $350,000 in cash for the house today. You think you can rent out the property for the next 10 years, receiving $1,400 in cash each month after your expenses and taxes. At the end of ten years, you believe you will be able to sell the property for $425,000. If your discount rate is 7.2% annually with monthly compounding, what is the NPV of the rental property? (Assume first payment is 1 month from today)

Q: You've just bought a new​ flat-screen TV for ​$2,800 and the store you bought it from offers to let…

A: Price of TV (PV) = $ 2,800 Annual interest rate = 15% Monthly interest rate (r) = 15%/12 = 1.25%…

Q: You want to buy a car, and a local bank will lend you $20,000. The loan would be fully amortized…

A: Given Information in the Question:- Loan Amount is $20,000 Loan Period is 5 Years or 60 months…

Q: What is the monthly payments you must make on this loan?

A: Pricipal=? n=60 months Rate=12%

Q: You are looking to purchase a new car, and you expect to have annual maintenance costs to keep it…

A: Please see the next step for the solution

Q: You are considering buying a condo as an investment property. The condo will generate $20,000 a year…

A: Maximum you should pay for the property is the present value of future cashflows

Q: After deciding to acquire a new car, you can either lease the car or purchase it with a three-year…

A: Lease is a way to get the asset for a fixed time period by paying periodicals payments to other…

Q: An engineer purchases a house using only a loan borrowed from a local bank. The loan is offered at…

A: A study that proves that the future worth of the money is lower than its current value due to…

Q: You planned to borrow $575,000 for a house at 2.9% interest for 30 years.  You find a house that you…

A: A loan is a sum of money obtained from outside sources such as banks and repaid over time in fixed…

Q: How much must you save each year

A: The worth of today’s dollar at a future date is the future value of the dollar. For example, the…

Q: The annual income from an apartment house is $20,000. The annual expense is estimated to be $2000.…

A: Given:

Q: You have just purchased a new warehouse. To finance the purchase, you have arranged for a 30-year…

A: The calculation is:

Q: You are planning to retire in 25 years time. Immediately after your retirement, you wish to go for a…

A: Present Value of Ordinary Annuity refers to a concept which determines the value of cash flows at…

Q: You are about to purchase a new car and have two options to pay for it. You can pay $20,000 in cash…

A: Ordinary annuity are the PMTs which are made at the end of the period.

Q: You can borrow 5,000 pesos from a friend or from a bank. Your bank will charge you 20% each year,…

A: Here, Borrowed Amount is 5,ooo pesos Interest Rate charged by Bank is 20% Interest Rate charged by…

Q: You can afford payments of $950 per month for the purchase of a house. a) What is the largest…

A: Given details, Monthly payments, C = $950Interest rate, r = 3.2% p.a.  or 0.267% per month (3.2%…

Q: You are thinking of purchasing a house. The house costs $200,000. You have $29,000 in cash that you…

A: The value for mortgage would be considered as the agreement between the bank and individual party…

Q: You decide to buy a house costing $400,000. You pay $100,000 down, and the remainder will be paid in…

A: Loans are a way through which individual finance their big expenditures. These types of loans help…

Q: How much money will the bank loan you? How much can you offer for the house?

A: Loan payments: These are payments made by the borrower to the lender of the loan. These payments…

Q: Suppose you wanted to buy a $200,000 house. You have $30,000 cash to use as the downpayment. The…

A: Given PV = amount of loan = 200000-30000 = $ 170000 r = rate of interest = 6/12 = 0.05 n = number of…

Q: As part of your financial planning, you wish to purchase a new car exactly 5 years from today. The…

A: Present value of the car = $20,000 When the inflation rate is 2% Future value of the car = Present…

Q: You are planning to retire in 25 years time. Immediately after your retirement, you wish to go for a…

A: “Hi There, Thanks for posting the questions. As per our Q&A guidelines, must be answered only…

Q: You are thinking of purchasing a house. The house costs $300,000. You have $43,000 in cash that you…

A: We need to use loan amortization formula to calculate annual payment Annual payment(PMT)…

Q: You want to save the down payment required to purchase a vacation home at the end of four years. If…

A: FUTURE VALUE OF ANNUITY  (FVA) FORMULA: FVA=A×1+rn-1r where, r=rate of interest n = number of years…

Q: You are buying your first car for $20,000 and are paying $2,000 as a down payment. You have…

A: the monthly loan amount will be                                    = p*[ r(1+r)n/(1+r)n-1]…

Q: You are thinking of renovating a basement apartment beneath your house, which you currently rent out…

A: Incremental rent per month due to reinovation = C = $ 729 - $ 521 = $ 208Payment frequency =…

Q: You are thinking of purchasing a house. The house costs $400,000. You have $57,000 in cash that you…

A: Down payment  It is the payment generally made in cash, in the early stages of the purchase of both…

Q: Robert recently borrowed $20,000 to purchase a new car. The car loan is fully amortized over 4…

A: Ordinary annuity are the PMTs which are made at the end of the period.

Q: You’d like to buy a sailboat for $12,000. If you start with your tax rebate of $1200, and then also…

A: In the given question we need to compute the time period it will take to save $12000 for sailboat.

Q: In order to purchase a brand new set of living room furniture, you take out a loan from the bank at…

A: Cash price is the present value of quarterly payment made at the of the quarter.

Q: To buy an $180,000 condominium, you put down $30,000 and take out a mortgage for $150,000 at an APR…

A: The calculation is:

Q: You want to purchase a new condominium that costs $285,000. Your plan is to pay 30 percent down in…

A: A written agreement through which a lender gets the right to take the property that is put as a…

Q: You are looking to purchase a Tesla Model X sport utility vehicle. The price of the vehicle is…

A: Loans are the liability of the borrower which is used to finance the requirement of the funds. The…

Q: You want to buy a car, and a local bank will lend you $35,000. The loan will be fully amortized over…

A: Loan is contract between lender and borrower where lender provide funds to borrower that is repaid…

Q: Your goal is to retire in 20 years.  You plan to start on this path by saving $200 a month.  If you…

A: Given: No. of years= 20 yrs No. of months= 240 (20*12) Rate= 6% annually Payment each month= $200…

Q: Someone offers to buy your car for four, equal annual payments, beginning 2 years from today. If you…

A: We use PMT function to calculate annual payments

Q: You are thinking of purchasing a house. The house costs $350,000. You have $50,000 in cash that you…

A: Given, Rate per period = 0.06 Total number of payments (nper) = 30 Present value (pv) = 300,000…

Q: A couple is trying to decide between renting or buying a house. They could buy a new home with a…

A: It is required to compare the present value of the cost of both the options. The option with the…

Q: You want to buy a car, and a local bank will lend you $20,000. The loan would be fully amortized…

A: A loan is a method through which an individual can borrow money from a financial institution for…

Q: You want to buy a car, and a local bank will lend you$40,000. The loan will be fully amortized over…

A: The real interest that an investor earns on the investment and a borrower pays on loan after…

Q: You are thinking of purchasing a house. The house costs $400,000. You have $57,000 in cash that you…

A: Question is based on the concept of Mortgages

Q: You are planning to build a vacation home.  Your rich uncle offers you a $35,000 loan at 10.5%…

A: The number of years that will take to pay off the loan at given interest rate can be calculated by…

Q: Your start-up company's net profit next year will be $50,000, and you then expect that to increase…

A: Equivalent annual worth provides a basis of measurement and comparison by converting the cash flows…

Q: you want to buy a car, and a local bank will lend you $20,000. The loan will be fully amortized over…

A: Given:

Cost of Credit

The cost of credit is an extra amount that the borrower has to pay besides the loan amount. These credit charges may vary from loan to loan. The cost of credit includes interest charges, maintenance charges, and arrangement charges. Some of the costs are mandatorily collected by the lender based on the loan amount and tenure of the loan. The cost of credit is also called finance charges of the credit.