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You are comparing houses in two towns in New Jersey. You have $100,000 to put as a down payment and 30-year mortgage rates are at 5%. Maplewood Orange Price of the house $ 400,000 $$ 300,000 Annual Property Tax $ 6,000 $ 12,000 The houses are roughly equivalent.

1. Estimate the total yearly payments (mortgage and property taxes) you would have on each house. Which one is less expensive?

2. Are mortgage payments and property taxes directly comparable? Why or why not?

3. If the $ amount of property taxes is expected to grow 3% a year forever in Chatham and 2% forever in Orange, which house is less expensive?

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Financial Management, Finance

Category:- Financial Management
Reference No.:- M92260776

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