Property taxes of current property value

Assignment Help Financial Management

Reference no: EM131525639

You are deciding whether to own or rent a single family residence. You could rent the property for $2,000 a month, or you could buy the property for $200,000 and finance it with a 85% LTV fixed-rate fully amortizing 30 year mortgage at 4%. You expect an annual appreciation rate of 3%, maintenance and insurance at currently $1,200/year and increase by 2% a year, you have a 28% marginal tax rate, and plan to live in the property for three years. Selling costs would be 6.5% of the sale price and property taxes are 1.5% of current property value.

If you could earn a 12% IRR on an investment of similar risk over the same holding period, should you buy this property? Yes or No and why?

Reference no: EM131525639

Questions Cloud

Market price of this stock based on its dividend : The return of stock of this risk class is 6%. What is the market price of this stock based on its dividend?

What is required rate of return of common stock : What is the required rate of return of the common stock? What is the market rate if the bonds sell for $1075 per bond?

What is the required rate of return of common stock : If the growth rate is 6% per annum and the earnings are $ 4 per share. What is the required rate of return of the common stock?

What is the bonds annual coupon rate : What is the bonds (nominal) annual coupon rate?

Property taxes of current property value : Selling costs would be 6.5% of the sale price and property taxes are 1.5% of current property value.

Prepare a balance sheet for the general fund : The following transactions relate to the General Fund of the City of Buffalo Falls for the year ended December 31, 2012.

Prepare journal entries in the general fund : The District had outstanding encumbrances of $13,000 for band instruments from the previous year. It is the District's policy to re-establish.

What type of receivables result from sales transactions : What type of receivables result from sales transactions? Which one of the following is not a method used by companies to accelerate cash receipts?

What is the required rate of return of common stock : What is the value of the preferred stock if it pays a $5 dividend? What is the required rate of return of the common stock?

User Account

All Pages