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

The stock of company a has a beta of 15 the return of

The stock of company A has a beta of 1.5. The return of market portfolio is 9% and the risk-free rate is1%. 1) According to the Capital Asset Pricing Model (CAPM), what is the expected return of this stock? 2) Assuming t ...

1 under what circumstances is it acceptable for a

1. Under what circumstances is it acceptable for a researcher to use deception in a study with human participants? 2. What kinds of information must be included accurately as part of the informed consent? (That is, what ...

Finance1on a typical day park place clinic writes 1000 in

Finance 1. On a typical day, Park Place Clinic writes $1,000 in checks. It generally takes four days for those checks to clear. Each day the clinic typically receives $1,000 in checks that take three days to clear. What ...

Corporation y needs to purchase a new machine costing 208

Corporation Y needs to purchase a new machine costing $2.08 million. Management is estimating the machine will generate cash inflows of $396,000 for two years and $300,000 for the following seven years. If management req ...

What distinguishes the free cash flow of a firm from its

What distinguishes the free cash flow of a firm from its cash flow from operations? What is the relation between EBITDA and cash flow from operations? How can a negative free cash flow be considered good news? How can a ...

1 what is the purpose of the accrual tranche could a cmo

1. What is the purpose of the accrual tranche? Could a CMO exist without a Z class? What would be the difference between the CMO with and without the accrual class? 2. Which tranches in a CMO issue are least subject to p ...

What is the firms goal with regard to cash collections

What is the firm's goal with regard to cash collections? Describe each of the following types of collection systems: a. Field-banking system b. Mail-based collection system c. Electronic system.

Problems -1 triangular arbitragesuppose you observe the

Problems - 1. Triangular Arbitrage Suppose you observe the following posted exchange rates on the Japanese yen (¥) and South African ran (R) against the US dollar: JPY - ¥97.3702/$ ZAR - R10.1453/$ The posted cross rate ...

1 define reaction time task completion time and

1. Define reaction time, task completion time, and interbehavior latency. 2. Give three examples (other than those in the chapter) of measures of duration. 3. What is interrater reliability, and what are some ways in whi ...

In fig 911 is intermediate code to compute the dot product

In Fig. 9.11 is intermediate code to compute the dot product of two vectors A and B. Optimize this code by eliminating common subexpressions, performing reduction in strength on induction variables, and eliminating all t ...

  • 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

WalMart Identification of theory and critical discussion

Drawing on the prescribed text and/or relevant academic literature, produce a paper which discusses the nature of group

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