Assume you are thinking of buying a house currently priced at $169,000. If housing prices rise at an annual inflation rate of 3%, estimate the purchase price of a similar house if you wait 4 years before committing yourself to buying one.
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- Suppose you want to save up $100,000 to buy a house in 10 years. You plan to invest a lump sum amount of $50,000 today in a savings account that pays an annual interest rate of 6%. How long will your investment take to grow to $100,000? Will you be able to buy your desired house with the current investment after 10 years?You are considering the purchase of a property today for $300,000. You plan to finance it with an 80 percent loan. The appreciation rate on the property value is expected to be 4 percent annually for the next three years. Required: a. Approximate the expected annual average rate of appreciation on home equity for the next three years. b. What if you now think that a $300,000 purchase price may be somewhat high and that if you pay this price, the expected appreciation rates in your house price will be as follows: year 1 = 0%, year 2 = 2%, and year 3=3%. Approximate the expected annual average rate of appreciation on home equity for the next three years.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.
- Suppose you have three goals in your financial planning for saving money. First, you would like lo be able to retire 25 years from now with a retirement income of $10,000 (today's dollar) per month for 20 years. Second, you would like to purchase a vacation home in Sedona in 10 years at an estimated cost of $500,000 (today's dollars). Third, assuming that you will live until your life expectancy, say 20 years after your retirement, you would like to leave a cash contribution to your college in the amount of $1,000,000 (actual dollars). You can afford to save $2,000 (actual dollars) per month for the next 10 years. Assume that the general inflation rate is 4% and the property value in Sedona increases at an annual rate of 5%. Your first retirement withdrawal will be made 25 years and 1 month from now. Before retirement, you would be able to invest your money at an annual rate of 10%. But after retirement, you will invest your assets in more conservative financial assets at an annual…Suppose you have three goals in your financial planning for saving money.First, you would like to be able to retire 25 years from now with a retirement income of $10,000 (today's dollar) per month for 20 years. Second, you would like to purchase a vacation home in Sedona in 10 years at an estimated cost of $500,000 (today's dollars). Third, assuming that you will live until your life expectancy, say 20 years after your retirement, you would like to leave a cash contribution to your college in the amount of $1,000,000 (actual dollars). You can afford to save $2,000 (actual dollars) per month for the next 10 years. Assume that the general inflation rate is 4% and the property value in Sedona increases at an annual rate of 5%. Your first retirement withdrawal will be made 25 years and 1 month from now. Before retirement, you would be able to invest your money at an annual rate of 10%. But after retirement, you will invest your assets in more conservative financial assets at an annual rate…You are trying to convince an investor into buying a rental apartment unit that fetches a rent of 10,000/mo. If the holding period is 30 years, what is the Present Value of the Annual Rent with 10% interest rate?
- 2. You plan to purchase an office space in Chamblee's Chinatown for $50,000 at the end of year 2021. You estimate that by renting out that office space, you will receive a stream of rental income for the coming eight years at the end of each year as shown in below. After eight years, you estimate that you can still sell the office space for $45,000 at the end of the eighth year. Is this project a good investment if you project that the normal rate of return in this line of business is 12%? How about if the general rate of return is 15% ? 8%? Year 1 $6,000 Year 5 $7,500 Year 2 $6,500 Year 6 $8,500 Year 3 $7,000 Year 7 $8,500 Year 4 $7,500 Year 8 $8,500 3. Based on the information provided in Step 2 above, compute the Internal Rate of Return for the investment. 4. While you were waiting for your first job interview results to come, you spent several dollars to buy a Georgia Educational Lotto and were lucky enough to win a $1 million prize. The prize is to be awarded in 20 annual payments…Please Show me the calculations!! A real estate investor is considering the purchase of an apartment building that currently provides income of $30,000 and is expected to grow in income by 3% for the next 4 years. You would receive income from today, year 0, through year 4. At the end of year 4, they expect to sell the property for $800,000. The investor has a discount rateof 6%. How much should an investor be willing to pay for this property?You plan to purchase a rented house which you could rent to earn you an annual income of $12,000. The expected annual expenses of the house are $3,000. You plan to sell the house for $145,000 at the end of ten years .a. Draw a cash flow diagram for this investment if you consider 18% to be a suitable interest rateb. Determine how much you could afford to pay for it now.
- You are considering buying a condo as an investment property. The condo will generate $20,000 a year for 10 years in rent, after which you expect to sell the property for $275,000. What is the maximum you should pay for the property if your cost of money is 7%?You are thinking of buying a house beside the College which you will rent to students. You expect to receive $2,000 a month in rental income. Your real estate agent estimates that you will be able to sell the property for $250,000 at the end of 46 months. You'd like a return of at least 0.2% per month. What is the most that you should pay for the house, assuming that you will purchase the house today and receive the first (beginning of month) rental payment today. What is the most that you should pay for the property today? (Round to the nearest dollar.)You are thinking about buying a real estate property. If you buy the property, you think you will sell it for $714663 in 8 years. If your required return on investments of this risk is 10.54%, what is the most that you should be willing to pay for the property? Round to 2 decimal places. Include a dollar sign ($) or percent (%) as appropriate.