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    Buy Vs Rent Decision - Case Exercise

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    1) The document outlines the costs and cash flows associated with buying a condo over various time periods. 2) It shows details like the purchase price, down payment, taxes, fees, mortgage amount, interest rate, monthly payments, expenses, and rental income. 3) Scenarios are presented showing the financial outcomes of selling the condo at different price points after 2 years, 5 years, and 10 years, factoring in costs and the present value of cash flows.

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    Buy Vs Rent Decision - Case Exercise

    Uploaded by

    Life saver
    307 views6 pages
    1) The document outlines the costs and cash flows associated with buying a condo over various time periods. 2) It shows details like the purchase price, down payment, taxes, fees, mortgage amount, interest rate, monthly payments, expenses, and rental income. 3) Scenarios are presented showing the financial outcomes of selling the condo at different price points after 2 years, 5 years, and 10 years, factoring in costs and the present value of cash flows.

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    buy vs rent Decision_Case Exercise

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    1) The document outlines the costs and cash flows associated with buying a condo over various time periods. 2) It shows details like the purchase price, down payment, taxes, fees, mortgage amount, interest rate, monthly payments, expenses, and rental income. 3) Scenarios are presented showing the financial outcomes of selling the condo at different price points after 2 years, 5 years, and 10 years, factoring in costs and the present value of cash flows.

    Copyright:

    © All Rights Reserved
    Download as XLSX, PDF, TXT or read online from Scribd
    Download as xlsx, pdf, or txt
    307 views6 pages

    Buy Vs Rent Decision - Case Exercise

    Uploaded by

    Life saver
    1) The document outlines the costs and cash flows associated with buying a condo over various time periods. 2) It shows details like the purchase price, down payment, taxes, fees, mortgage amount, interest rate, monthly payments, expenses, and rental income. 3) Scenarios are presented showing the financial outcomes of selling the condo at different price points after 2 years, 5 years, and 10 years, factoring in costs and the present value of cash flows.

    Copyright:

    © All Rights Reserved
    Download as XLSX, PDF, TXT or read online from Scribd
    Download as xlsx, pdf, or txt
    of 6

    Starting after 2 Yrs after 5 yrs

    Buying Price 600000


    down payment 120000
    deed transfer tax 18000
    other closing fees 2000
    total due at closing 140000
    Amortisation period in yrs 25 23 20
    Frequency of Payment 12.00 12.00 12.00
    No.of payments remaining 300.00 276.00 240.00

    PV of Mortgage Amount 480000 $456,609.29 $417,858.79


    Annual interest rate 0.04
    Monthly effective Int. Rate 0.0033058903
    Montly mortgage amount $2,524.90
    Monthly condo fees $1,055.00
    Montly property tax $300.00
    monthly maintenance exp $50.00
    Monthly EMI for buying condo $3,929.90
    monthly rental exp $3,000.00
    Excess Monthly payment over rent $929.90
    Monthly opportunity cost of due at cosi $ 462.82
    Monthly excess cash outflow $1,392.72
    after 10 yrs Scenario 1
    Selling price
    realtor fees
    other selling cost
    principal outstanding
    net proceeds
    15 closing cost
    12.00 opportunty cost of extra paymrny
    180.00 net future value
    npv
    $342,109.01

    Scenario 2
    Selling price
    realtor fees
    other selling cost
    principal outstanding
    net proceeds
    closing cost
    opportunty cost of extra paymrny
    net future value
    npv

    Scenario 3
    Selling price
    realtor fees
    other selling cost
    principal outstanding
    net proceeds
    closing cost
    opportunty cost of extra paymrny
    net future value
    npv

    Scenario 4
    Selling price
    realtor fees
    other selling cost
    principal outstanding
    net proceeds
    closing cost
    opportunty cost of extra paymrny
    net future value
    npv
    NPV Np change in price

    after 2 yrs after 5 yrs after 10 yrs


    600000 600000 600000
    30000 30000 30000
    2000 2000 2000
    $456,609.29 $417,858.79 $342,109.01
    $111,390.71 $150,141.21 $225,890.99
    140000 140000 140000
    $34,727.42 $92,259.04 $204,722.29
    ($63,336.72) ($82,117.83) ($118,831.30)
    ($58,513.34) ($82,117.83) ($118,831.30)

    after 2 yrs after 5 yrs after 10 yrs


    540000 600000 660000
    27000 30000 33000
    2000 2000 2000
    $456,609.29 $417,858.79 $342,109.01
    $54,390.71 $150,141.21 $282,890.99
    140000 140000 140000
    $34,727.42 $92,259.04 $204,722.29
    ($120,336.72) ($82,117.83) ($61,831.30)
    ($111,172.53) ($67,365.22) ($41,610.69)

    after 2 yrs after 5 yrs after 10 yrs


    624240 662448.48192 731396.651997
    31212 33122.424096 36569.8325998
    2000 2000 2000
    $456,609.29 $417,858.79 $342,109.01
    $134,418.71 $209,467.26 $350,717.81
    140000 140000 140000
    $34,727.42 $92,259.04 $204,722.29
    ($40,308.72) ($22,791.77) $5,995.52
    ($37,239.02) ($18,697.19) $4,034.81

    after 2 yrs after 5 yrs after 10 yrs


    661500 765768.9375 977336.776066
    33075 38288.446875 48866.8388033
    2000 2000 2000
    $456,609.29 $417,858.79 $342,109.01
    $169,815.71 $307,621.70 $584,360.93
    140000 140000 140000
    $34,727.42 $92,259.04 $204,722.29
    ($4,911.72) $75,362.66 $239,638.63
    ($4,537.67) $61,823.63 $161,269.93

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