Unformatted text preview: (a) $4585.61 (b) $3552.61 2) You are considering buying a $100,000 Condo with the following finance options. You can make a 20% down payment and borrow the remaining 80% at 6.25% for 30 years (monthly pmts) or you can put 5% down and pay 3 points to borrow the 95% balance at 6 % (monthly pmts.) a) Determine the payments for each option. (a) Pmt = $492.57 (b) pmt = $569.57 b) Which option will have the lowest present value total cash outlay given you intend on staying in the condo only 4 years? (a) Pv outlay = $20,000 + $20,871.77 (b) Pv outlay = $7850 + $24, 134.51 c) Which option leaves you in the best increase in wealth when you sell the house after 4years? Option (a) because the$2850 for points will swamp the estra equity gained by the lower monthly pmts achieved by buying down the rate....
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 Winter '10
 JerryNelson
 Economics, Net Present Value, Payment, monthly pmts

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