Assume you buy a house for $560,000 and have $112,000 as a down payment. Your mortgage rate is 3 percent APR compounded
Posted: Thu May 26, 2022 8:16 am
Assume you buy a house for $560,000 and have $112,000 as a down
payment. Your mortgage rate is 3 percent APR compounded
semi-annually and you amortize the mortgage over 25 years with
monthly payments. You will assume that you could have earned 5
percent EAR on the down payment (opportunity cost), your marginal
income tax rate is 40 percent, real estate fees are 4 percent +HST,
and property taxes will be $5,600 annually for this calculation.
Ignore maintenance costs. a. What is the true return on your
investment if you sell it in 6 years for $890,000? (Do not round
your intermediate calculations. Round your answer to 2 decimal
places. Omit the "%" sign in your response.)Return on Investment
%b. What is an approximate annualized rate of return on your
investment? (Do not round your intermediate calculations. Round
your answer to 3 decimal places.
payment. Your mortgage rate is 3 percent APR compounded
semi-annually and you amortize the mortgage over 25 years with
monthly payments. You will assume that you could have earned 5
percent EAR on the down payment (opportunity cost), your marginal
income tax rate is 40 percent, real estate fees are 4 percent +HST,
and property taxes will be $5,600 annually for this calculation.
Ignore maintenance costs. a. What is the true return on your
investment if you sell it in 6 years for $890,000? (Do not round
your intermediate calculations. Round your answer to 2 decimal
places. Omit the "%" sign in your response.)Return on Investment
%b. What is an approximate annualized rate of return on your
investment? (Do not round your intermediate calculations. Round
your answer to 3 decimal places.