Question 3: no change in condo's price

2 years 5 years 10 years

Selling Price 600,000 600,000 600,000
Realtor Fees (@5% of selling price)
Other Selling fees 2,000 2,000 2,000
Remaining principal
Net Proceeds from selling
Funds at Closing (down payment plus closing fees at purchase) 140,000 140,000 140,000
Net FV
PV of Future Net (discount using effective monthly rate)

Question 4: condo price increases 2% annually

2 years 5 years 10 years

Selling Price (estimate first assume price increase)
Realtor Fees (@5% of selling price)
Other Selling fees 2,000 2,000 2,000
Remaining principal
Net Proceeds from selling
Funds at Closing (down payment plus closing fees at purchase) 140,000 140,000 140,000
Net FV
PV of Future Net (discount using effective monthly rate)

Question 5: condo price increases 5% annually

2 years 5 years 10 years

Selling Price (estimate first assume price increase)
Realtor Fees (@5% of selling price)
Other Selling fees 2,000 2,000 2,000
Remaining principal
Net Proceeds from selling
Funds at Closing (down payment plus closing fees at purchase) 140,000 140,000 140,000
Net FV
PV of Future Net (discount using effective monthly rate)
 Time Value of Mo

1. Calculate Rebecca’s monthly mortgage payment using the following assumptions:

a. Purchase price $ 600,000.00

percentage 80%
VA $ 480,000.00
Effective monthly rate 0.33059%
Monthly mortgage payments $2,524.90

2. Calculate the outstanding mortgage principal after two, five and ten years

a) Two years
Interest rate 0.33059%
N per 24
Payment $ 2,524.90
Principal $ 480,000.00
Outstanding principal $456,609.29

b) Five years
Interest rate 0.33059%
N per 60
Payment $2,524.90
Principal $ 480,000.00
Outstanding principal $417,858.79

b) Ten years
Interest rate 0.33059%
N per 120
Payment $2,524.90
Principal $ 480,000.00
Outstanding principal $342,109.01

3. Calculate the future gain or loss from the purchase and resell of the condo after two, five and ten years. Assume the condo

Monthly condo fees (p/month) $ 1,055.00

Property taxes (p/month) $ 300.00
Maintenance (p/month) $ 50.00
Monthly mortgage payments $ 2,524.90
Rent (p/month) $ 3,000.00
Opportunity cost $ 462.82
Monthly additional payments $ 1,392.72

Down payment & closing costs $ 600,000.00

Down payment of purchase price 20.00%
Local deed-transfer tax 1.50%
Provincial deed-transfer tax 1.50%
$ 138,000.00
Other costs $ 2,000.00
$ 140,000.00
Investment rate 0.33059%
Opportunity cost $ 462.82

Two years Five years

Condo price $ 600,000.00 Condo price
Outstanding balance $ 456,609.29 Outstanding balance
Realtor fees (%) 5% Realtor fees (%)
Closing fees $ 2,000.00 Closing fees
Realtor fees $ 30,000.00 Realtor fees
Net $ 111,390.71 Net
% 0.33059% %
N per 24 N per
PV Monthly additional payments $ 32,082.77 PV Monthly additional payments
Down payment $ 140,000.00 Down payment
NPV $ (60,692.07) NPV

4. Calculate the future gain or loss from the purchase and resell of the condo after two, five and ten years. Assume the condo
years.from the original purchase price by the end of 10 years.

Two years Five years

Condo price $ 540,000.00 Condo price
Outstanding balance $ 456,609.29 Outstanding balance
Realtor fees (%) 5% Realtor fees (%)
Closing fees $ 2,000.00 Closing fees
Realtor fees $ 27,000.00 Realtor fees
Net $ 54,390.71 Net
% 0.33059% %
N per 24 N per
PV Monthly additional payments $ 32,082.77 PV Monthly additional payments
Down payment $ 140,000.00 Down payment
NPV $ (117,692.07) NPV

5. Calculate the future gain or loss from the purchase and resell of the condo after two, five and ten years. Assume the cond

Two years Five years

Condo price $ 624,240.00 Condo price
Outstanding balance $ 456,609.29 Outstanding balance
Realtor fees (%) 5% Realtor fees (%)
Closing fees $ 2,000.00 Closing fees
Realtor fees $ 31,212.00 Realtor fees
Net $ 134,418.71 Net
% 0.33059% %
N per 24 N per
PV Monthly additional payments $ 32,082.77 PV Monthly additional payments
Down payment $ 140,000.00 Down payment
NPV $ (37,664.07) NPV

6.      If you were Rebecca, would you buy the condo? Include any qualitative factors in your decision.

If I was Rebecca Young, I would decide to continue renting the condo instead of choosing to buy it. A main factor is that the ne
 Time Value of Money

and ten years. Assume the condo could be resold for $600,000.
 Five years Ten years
$ 600,000.00 Condo price $ 600,000.00
$417,858.79 Outstanding balance $342,109.01
5% Realtor fees (%) 5%
$ 2,000.00 Closing fees $ 2,000.00
$ 30,000.00 Realtor fees $ 30,000.00
$ 150,141.21 Net $ 225,890.99
0.33059% % 0.33059%
60 N per 120
tional payments $ 75,684.55 PV Monthly additional payments $ 137,772.23
$ 140,000.00 Down payment $ 140,000.00
$ (65,543.34) NPV $ (51,881.24)

and ten years. Assume the condo price decreases by 10% in two years, goes back up to $600,000 in five years, and increases by 10% in te

Five years Ten years

$ 600,000.00 Condo price $ 660,000.00
$417,858.79 Outstanding balance $342,109.01
5% Realtor fees (%) 5%
$ 2,000.00 Closing fees $ 2,000.00
$ 30,000.00 Realtor fees $ 33,000.00
$ 150,141.21 Net $ 282,890.99
0.33059% % 0.33059%
60 N per 120
tional payments $ 75,684.55 PV Monthly additional payments $ 137,772.23
$ 140,000.00 Down payment $ 140,000.00
$ (65,543.34) NPV $ 5,118.76

ve and ten years. Assume the condo price increases 2% every year since purchase.

Five years Ten years

$ 662,448.48 Condo price $ 731,396.65
$417,858.79 Outstanding balance $342,109.01
5% Realtor fees (%) 5%
$ 2,000.00 Closing fees $ 2,000.00
$ 33,122.42 Realtor fees $ 36,569.83
 $ 209,467.26 Net $ 350,717.81
0.33059% % 0.33059%
60 N per 120
tional payments $ 75,684.55 PV Monthly additional payments $ 137,772.23
$ 140,000.00 Down payment $ 140,000.00
$ (6,217.28) NPV $ 72,945.58

ive factors in your decision.

o buy it. A main factor is that the net future

rs, and increases by 10% in ten