An appraiser is looking for comparable sales and finds a property that recently sold for $204,500. She finds that the buyer was able to assume the seller's fully amortizing mortgage, which had monthly payments based on a 7 percent interest. The balance of the loan at the time of sale was $141,500 with a remaining term of 15 years (monthly payments). The appraiser determines that if a $141,500 loan was obtained on the same property, monthly payments at the market rate for a 15-year fully amortizing loan would have been 8 percent with no points. Required: a. Assume that the buyer is expected to benefit from the interest savings on the assumable loan for the entire loan term. What is the cash equivalent value of the property? b. What is the cash equivalent value of the property if you assumed that the buyer is only expected to benefit from interest savings for five years because he would probably sell or refinance after five years? Complete this question by entering your answers in the tabs below. Required A Required B Assume that the buyer is expected to benefit from the interest savings on the assumable loan for the entire loan term. What is the cash equivalent value of the property? (Do not round intermediate calculations. Round your final answer to 2 decimal places.) Cash equivalent value < Required A Required B >
An appraiser is looking for comparable sales and finds a property that recently sold for $204,500. She finds that the buyer was able to assume the seller's fully amortizing mortgage, which had monthly payments based on a 7 percent interest. The balance of the loan at the time of sale was $141,500 with a remaining term of 15 years (monthly payments). The appraiser determines that if a $141,500 loan was obtained on the same property, monthly payments at the market rate for a 15-year fully amortizing loan would have been 8 percent with no points. Required: a. Assume that the buyer is expected to benefit from the interest savings on the assumable loan for the entire loan term. What is the cash equivalent value of the property? b. What is the cash equivalent value of the property if you assumed that the buyer is only expected to benefit from interest savings for five years because he would probably sell or refinance after five years? Complete this question by entering your answers in the tabs below. Required A Required B Assume that the buyer is expected to benefit from the interest savings on the assumable loan for the entire loan term. What is the cash equivalent value of the property? (Do not round intermediate calculations. Round your final answer to 2 decimal places.) Cash equivalent value < Required A Required B >
Essentials Of Investments
11th Edition
ISBN:9781260013924
Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Chapter1: Investments: Background And Issues
Section: Chapter Questions
Problem 1PS
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Question
Transcribed Image Text:An appraiser is looking for comparable sales and finds a property that recently sold for $204,500. She finds that the buyer was able to
assume the seller's fully amortizing mortgage, which had monthly payments based on a 7 percent interest. The balance of the loan at
the time of sale was $141,500 with a remaining term of 15 years (monthly payments). The appraiser determines that if a $141,500 loan
was obtained on the same property, monthly payments at the market rate for a 15-year fully amortizing loan would have been 8
percent with no points.
Required:
a. Assume that the buyer is expected to benefit from the interest savings on the assumable loan for the entire loan term. What is the
cash equivalent value of the property?
b. What is the cash equivalent value of the property if you assumed that the buyer is only expected to benefit from interest savings for
five years because he would probably sell or refinance after five years?
Complete this question by entering your answers in the tabs below.
Required A Required B
Assume that the buyer is expected to benefit from the interest savings on the assumable loan for the entire loan term. What
is the cash equivalent value of the property? (Do not round intermediate calculations. Round your final answer to 2 decimal
places.)
Cash equivalent value
< Required A
Required B >
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