Reference no: EM132803969
Question - Derek and Meagan Jacoby recently graduated from State University, and Derek accepted a job in business consulting while Meagan accepted a job in computer programming. Meagan inherited $60,000 from her grandfather, who recently passed away. The couple is debating whether they should buy or rent a home. They located a rental home that meets their needs. The monthly rent is $3,050. They also found a three-bedroom home that would cost $280,000 to purchase. The Jacobys could use Meagan's inheritance for a down payment on the home. Thus, they would need to borrow $220,000 to acquire the home. They have the option of paying two discount points to receive a fixed interest rate of 4.50 percent on the loan or paying no points and receiving a fixed interest rate of 5.70 percent for a 30-year fixed loan.
Though anything could happen, the couple expects to live in the home for no more than five years before relocating to a different region of the country. Derek and Meagan don't have any school-related debt, so they will save the $60,000 if they don't purchase a home. Also, consider the following information:
The couple's marginal tax rate is 24 percent.
Regardless of whether they buy or rent, the couple will itemize their deductions and have the ability to deduct all of the property taxes from the purchase of a residence.
If they buy, the Jacobys would purchase and move into the home on January 1, 2020.
If they buy the home, the property taxes for the year are $4,400.
Disregard loan-related fees not mentioned above.
If the couple does not buy a home, they will put their money into their savings account, where they earn 5 percent annual interest.
Assume that all unstated costs are equal between the buy and rent options.
Required - Help the Jacobys with their decisions by answering the following questions: (Leave no answer blank. Enter zero if applicable.)
What is the approximate break-even point in years for paying the points to receive a reduced interest rate? (To simplify this computation, assume the Jacobys will make interest-only payments, and ignore the time value of money.).
|
What ethical standards apply to marketing property
: What interpersonal communication techniques may be used to support and promote confidence with the client and others?
|
|
What is its operating cycle
: A firm has an inventory conversion period (or average age of inventory) of 60 days, a receivables conversion period of 45 days, What is its operating cycle
|
|
What the net present value of the proposed investment is
: What the net present value of the proposed investment is closest to? Cost of the investment $ 70,000. Estimated salvage value $ 8,000
|
|
What is the balance of the loan at the end of year
: You have a 25-year $800,000 mortgage with a 4.5% rate of interest (compounded monthly) that you make monthly payments on. What is the balance of the loan
|
|
What is the approximate break-even point in years
: If they buy, the Jacobys would purchase and move into the home on January 1, 2020. What is the approximate break-even point in years
|
|
Define organizational culture as a set of beliefs and values
: Dimitrios and Konstantinos (2014) define organizational culture as "a set of beliefs, values, customs, traditions and practices which are experiences.
|
|
Gainsharing plans in hospitals-banks
: How could performance standards be developed for gainsharing plans in hospitals, banks, insurance companies, and so forth
|
|
Determine the current portion of the note payable
: Determine the current portion of the note payable and the long-term portion of the note payable at October 31, 2021
|
|
What is your role in health promotion
: As we are talking about social media, it's ultimately about reforming our approach to health communication. As a DNP-prepared nurse, what is your role in health
|