What selling price should place on home

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Housing Markets

A home comparable to yours in your neighborhood sold last week for $75,000. Your home has a $60,000 assumable 8% mortgage (compounded annually) with 30 years remaining. An assumable mortgage is one that the new buyer can assume on the old terms, continuing to make payments at the original interest rate. The house that recently sold did not have an assumable mortgage; that is, the buyers had to finance the house at the current market rate of interest, which is 7.5%.

Question 1: What selling price should you place on your home? Explain using capital budgeting calculations.

Reference no: EM132927906

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