Calculate the expected value, Financial Econometrics

Gabi wishes to purchase an apartment in Berea Johannesburg which is situated in a quiet street. The purchase price, including costs, is R355 000 and she wishes to obtain a 100% mortgage bond at an interest rate of 6%, interest compounded monthly. The term of the loan is 20 years. Property economists have suggested that property values are expected to rise at a rate of 9% per year. Gabi will be able to rent out the apartment after costs at a rate of R2 000  per month. Interest and rent are payable at  the beginning of each month.

Required:

1 Calculate the expected value of the apartment in 20 years' time.

2 What is the mortgage loan repayment at the beginning of each month?

3 What is the net amount Gabi has to pay in each month, if any?

Posted Date: 4/1/2013 2:50:38 AM | Location : United States







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