Reference no: EM131089764
1. At 45 years of age, Seth figured he wanted to work only 10 more years. Being a full-time landlord had a lot of advantages: cash flow, free time, being his own boss-but it was time to start thinking towards retirement. The real estate investments that he had made over the last 15 years had paid off handsomely. After selling a duplex and a four-unit and paying the associated taxes, Seth had $350,000 in the bank and was debt-free. With only 10 years before retirement, Seth wanted to make solid financial decisions that would limit his risk exposure. Fortunately, he had located another property that seemed to meet his needs-an older, but well maintained four-unit apartment. The price tag was $250,000, well within his range, and the apartment would require no remodeling. Seth figured he could invest the other $100,000, and between the two hoped to have $1 million to retire on by age 55.
2. A friend of Seth's who is a real estate developer needs to borrow $80,000 to finish a development project. He is desperate for cash and offers Seth 18%, compounded monthly, for 2.5 years. Find the future value of the loan using the future value table. Does this loan meet Seth's goals of low risk? How could he reduce the risk associated with this loan?
3. After purchasing the apartment, Seth receives a street, sewer, and gutter assessment for $12,500 due in 2 years. How much would he have to invest today in a CD paying 2%, compounded semiannually, to fully pay the assessment in 2 years? Note: Show all work and calculations. The use of Microsoft® Excel® software is required
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: A friend of Seth's who is a real estate developer needs to borrow $80,000 to finish a development project. He is desperate for cash and offers Seth 18%, compounded monthly, for 2.5 years. Find the future value of the loan using the future value t..
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