Calculate future worth of each plan and future worth value

Reference no: EM13237896

When a person or a couple decide to purchase a house, one of the most important considerations is the financing. There are many methods of financing the purchase of residential property, each having advantages which make it do method of choice under a given set of circumstances. The selection of one method from several for a given set of conditions is the topic of this case study. Three methods of financing are described in detail.

The criterion used here is: Select the financing plan which has the largest amount of money remaining at the end of a 10-year period. Therefore, calculate the future worth of each plan and select the one with do largest future worth value.

Plan
Description

A
30-year fixed rate of 10% per year interest, 5% down payment.

B
30-year adjustable-rate mortgage (ARM), 9% first 3 years. 9.5% in year 4, 10.5 % in years 5 through 10 (assumed), 5% down payment.

C
15-year fixed rate of 9.5 % per year Interest, 5% down payment

Reference no: EM13237896

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