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What is the npv of home investment

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Assume you are buying a home between $100,000 and $400,000 in Texas. Assume a price that has not been chosen by another student; for example if a student has chosen a $300,000 home price then no other student should choose a $300,000 home. Assume you borrow 80 % of the purchase price at 3.75 % interest rate. Assume interest and principal are paid annually, at the end of each year for 15 years. This will be a 15-year loan.

Question 1: What is your annual payment?

Question 2: What is the loan balance after 4 years?

Question 3: How much total payment you have made after 4 years?

Question 4: Suppose at the end of year 2 you spend $5,000 and at the end of year 3 you spend another $6,000 for the upkeep of your home. Suppose at the end of year 4 you sell your home at 30 % above the purchase price. What is the NPV of your home investment? Use a 3.75% discount rate. The NPV of your investment?

Reference no: EM132930078

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