Analyzing Hidden Interest in a Real Estate Deal: Present Value – Many advertisements contain offers that seem too good to be true. A few years ago, an actual newspaper ad offered “a $150,000 house with a zero interest rate mortgage” for sale. If the purchaser made monthly payments of $3,125 for four years ($150,000 ÷ 48 months), no interest would be charged. When the offer was made, mortgage interest rates were 12 percent. Present value for n = 48, and i = 1% is 37.9740.
1. Did the builder actually provide a mortgage at zero interest?
2. Estimate the true price of the home that was advertised. Assume that the monthly payment was based on an implicit interest rate of 12 percent.
Submit Your Assignment and get professional help from our qualified experts!
Estimate the true price of the home that was advertised. Assume that the monthly payment was based… was first posted on July 4, 2020 at 9:42 am.
©2019 "Submit Your Assignment". Use of this feed is for personal non-commercial use only. If you are not reading this article in your feed reader, then the site is guilty of copyright infringement. Please contact me at email@example.com