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What must be maximum price of house fifteen years from now

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Question 1: You have just turned 30. Your parents are urging you to buy a house by taking a loan of ? 5,000,000 at 9% APR, 15 years repayment with monthly EMI (payments at end of month). Unfortunately, you listened to your FM-1 professor yesterday who suggested that investing the equivalent of EMI is better than buying a house. Suppose you find an investment that yields an EAR of 15% and you think instead of paying EMI, you can invest that money in this investment and later on use the compounded returns to buy a house with cash. What must be the maximum price of a house 15 years from now that makes you indifferent between the two choices?

Reference no: EM132895931

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