Reference no: EM131740039

Question 1: Determine the required monthly payments for the mortgage.

Question 2: Determine the "opportunity" costs, on a monthly basis, of using the required funds for closing (i.e., down payment plus all closing costs), rather than leaving funds invested and earning the monthly effective rate determined in part (1) above.

Question 3: Determine the monthly additional payments required to buy versus rent (include the monthly opportunity costs determined in part (2) above).

Question 4: Determine the principal outstanding on the mortgage after:

a. Two years

b. Five years

c. 10 years

Question 5: Determine the "net" future gain or loss after 10 years under the following scenarios, which Rebecca Young has determined are possible after some "due diligence" regarding future real-estate prices in the Toronto condo market (note that she will sell the condo after 10 years):

a. The condo price remains unchanged.

b. The condo price increases by a total of 10% from the original purchase price by the end of 10 years.

c. The condo price increases annually by the annual rate of inflation of 2% per year over the next 10 years.

d. The condo price increases annually by an annual rate of 5% per year over the next 10 years.

Question 6: As Rebecca Young, what decision would you make? Describe any qualitative or other quantitative considerations that could factor into your decision.