Ask Question, Ask an Expert

+1-415-315-9853

info@mywordsolution.com

Ask Basic Finance Expert

1) The investor is looking at a $1.5 million parcel of land. She has two options:

a) She can put 20% down and employ 15 year loan rate found in WSJ.

b) She can put no money down and employ 30 year loan rate found in WSJ but she will have to pay private mortgage insurance (PMI) of 0.1% a month on the balance of the loan till she has 20% equity in the property. (Look up PMI on the internet if you’re not certain how this works.) The property will be grateful for in value at the rate of 0.2% a month.

Find out which option she must select. Suppose opportunity cost of her down payment is 0.25% a month. Setup cash flows in each case and then produce a column which nets them out. Think about how to determine when she no longer requires to pay monthly PMI fee. Compute the NPV by using the 15 year loan rate as discount rate.

2) Make a data table where column input is the difference in mortgage rates, go from 0% to 2% in increments of 0.1%. NPV is the other variable.

Make another data table where column input is PMI rate; go from 0% to 0.2% in increments of 0.01%. Again other variable is NPV.

Make another data table where column input is down payment amount; go from 0% to 20% in increments of 1%. Again other variable is NPV. describe the findings.

Requirements
Min Pages: 1

Basic Finance, Finance

  • Category:- Basic Finance
  • Reference No.:- M914175

Have any Question? 


Related Questions in Basic Finance

Compare and contrast the effects of dividends vs stock

Compare and contrast the effects of dividends vs. stock repurchases, the pros and cons of each, and how the managers decide between the two.

1 what are the primary differences between operating leases

1. What are the primary differences between operating leases and financial leases? 2. How does a leveraged lease differ from a nonleveraged financial lease? What type of firm or organization is most likely to take advant ...

1 what are the stanton and peclet numbers and how are they

1. What are the Stanton and Peclet numbers and how are they related to other convective mass-transfer dimensionless numbers? 2. In applying dimensional analysis to explain mass-transfer coefficient, one must consider the ...

Build on the design you created in question to test the

Build on the design you created in Question to test the hypothesis that the effects of watching violent TV shows will be greater for boys than for girls. (What kind of design is this?) Question Design a randomized groups ...

The scientific method can be described as a circle or a

The scientific method can be described as a circle or a spiral of steps that leads from an initial observation, to a hypothesis, to new observations, to a new hypothesis. For each of the following observations: a. State ...

1 what do you see as the biggest challenges in conducting a

1. What do you see as the biggest challenges in conducting a brand audit? What steps would you take to overcome them? 2. Pick a brand. See if you can assemble a brand inventory for it.

Explain the difference between a short hedge and a long

Explain the difference between a short hedge and a long hedge ? a. What is the basis? b. How is the basis expected to change over the life of a futures contract? c. Explain why a strengthening basis benefits a short hedg ...

1 explore the websites of companies producing beverages and

1. Explore the websites of companies producing beverages, and represent the logistics system of one of them. 2. Discuss the main differences in managing a logistics system of a service company (in particular, a bank) and ...

The black bird company plans an expansion the expansion is

The Black Bird Company plans an expansion. The expansion is to be financed by selling $53 million in new debt and $50 million in common stock. The before-tax required rate of return on debt is 7.01% and the required rate ...

1 what are the most important threats to validity that

1. What are the most important threats to validity that occur in quasi experimental research designs when the research is conducted over a period of time? What techniques can be used to minimize these potential interpret ...

  • 4,153,160 Questions Asked
  • 13,132 Experts
  • 2,558,936 Questions Answered

Ask Experts for help!!

Looking for Assignment Help?

Start excelling in your Courses, Get help with Assignment

Write us your full requirement for evaluation and you will receive response within 20 minutes turnaround time.

Ask Now Help with Problems, Get a Best Answer

Section onea in an atwood machine suppose two objects of

SECTION ONE (a) In an Atwood Machine, suppose two objects of unequal mass are hung vertically over a frictionless

Part 1you work in hr for a company that operates a factory

Part 1: You work in HR for a company that operates a factory manufacturing fiberglass. There are several hundred empl

Details on advanced accounting paperthis paper is intended

DETAILS ON ADVANCED ACCOUNTING PAPER This paper is intended for students to apply the theoretical knowledge around ac

Create a provider database and related reports and queries

Create a provider database and related reports and queries to capture contact information for potential PC component pro

Describe what you learned about the impact of economic

Describe what you learned about the impact of economic, social, and demographic trends affecting the US labor environmen