Beginning mortgage loan repayment at beginning of each month

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Reference no: EM131994799

Mr Grant wants to purchase an apartment in New Kasama, a high cost residential area of Lusaka. The apartment is situated in tree lined avenue. The purchase price, with costs is K710, 000 and he is able to obtain a 100% mortgage loan at an interest rate of 6%, interest is compounded monthly. The term of the loan is 20 years. The central bank has released preliminary data that the property values are expected to rise at a rate of 9% per year (0.75% per month ). Mr Grant intends to rent out the property after costs at a rate of K4, 000 per month for the first year. Interest and rent are payable at the beginning of each month.

Required

(a) What is the expected value of the apartment in 20 years time?

(b) What is the beginning mortgage loan repayment at the beginning of each month?

Reference no: EM131994799

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