A)
Discount
year Cashflow a@6.5%
0 -130000 1 -130000
1 20000 0.9389671362 18779.342723
2 25000 0.8816592828 22041.482069
3 50000 0.8278490918 41392.45459
4 55000 0.7773230909 42752.769999
5 15000 0.7298808365 10948.212548
NPV 5914.2619294
P.1 1.0454943225
B)
AT 6.5%, THE INVESTMENT IS GOOD AS IT YIELDS A POSITIVE NPV OF R5914.26 AND P.I ABOVE 1
C)
Discount
year Cashflow a@10%
0 -130000 1 -130000
1 20000 0.9090909091 18181.818182
2 25000 0.826446281 20661.157025
3 50000 0.7513148009 37565.740045
4 55000 0.6830134554 37565.740045
5 15000 0.6209213231 9313.8198459
NPV -6711.7248573
P.1 0.9483713473
AT 10%, THE INVESTMENT IS NOT GOOD AS IT YIELDS A NAGATIVE NPV OF -R6711.72 AND P.I BELOW 1
Discount Discount Discount Discount
factor at 7% factor at 7.5% factor at 8% factor at 8.5%
year Cashflow 7% 7.500% 8.000% 8.500%
0 -130000 1 1 1 1
1 20000 0.9345794393 0.9302325581 0.9259259259 0.9216589862
2 25000 0.8734387283 0.8653326122 0.8573388203 0.8494552868
3 50000 0.8162978769 0.8049605695 0.793832241 0.7829080984
4 55000 0.762895212 0.7488005298 0.7350298528 0.7215742843
5 15000 0.7129861795 0.6965586324 0.680583197 0.6650454233
NPV 3996.4801913 2118.4035668 278.99093638 -1522.766201
, 2a)
Present value(price of house) 700,000.00
Annual Interest rate on loan 11.25%
Initial deposit -
payments per year 360.00
Number of years 20.00
Term 7,200.00
Pmt(daily) ($244.53)
total monthly payment ($7,335.98)
total amount paid(FV) -1760634.777
Less price 700,000.00
Interest paid -1060634.777
2b)
Priice of house 700,000.00
Deposit(0.085*700000) 59,500.00
Present value(Outstanding balance) 640,500.00
Annual Interest rate on loan 11.25%
Initial deposit -
payments per year 360.00
Number of years 20.00
Term 7,200.00
Pmt(daily) (225.94)
total monthly payment (6,778.17)
total amount paid(FV) -1626759.777
Less price 640,500.00
Interest paid -986259.7774
c)
Priice of house 700,000.00 700,000.00 700,000.00 700,000.00 700,000.00
Deposit(0.085*700000) 59,500.00 59,500.00 59,500.00 59,500.00 59,500.00
Present value(Outstanding balance) 640,500.00 640,500.00 640,500.00 640,500.00 640,500.00
Annual Interest rate on loan 10.00% 10.25% 10.50% 10.75% 11.00%
Initial deposit - - - - -
payments per year 360.00 360.00 360.00 360.00 360.00
Number of years 20.00 20.00 20.00 20.00 20.00
Term 7,200.00 7,200.00 7,200.00 7,200.00 7,200.00
Pmt(daily) (208.36) (211.82) (215.31) (218.83) (222.37)
total monthly payment (6,250.81) (6,354.69) (6,459.38) (6,564.87) (6,671.14)
total amount paid(FV) -1500195.095 -1525126.3069 -1550252.0853 -1575568.727 -1601072.5262
Less price 640,500.00 640,500.00 640,500.00 640,500.00 640,500.00
