Essentials Of Investments
11th Edition
ISBN: 9781260013924
Author: Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher: Mcgraw-hill Education,
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Jenny has a monthly salary of $5,000 and an additional monthly allowance of $1,000. In Year 2020, she takes an annual Dividend of $5,000.
Jenny is expected to receive an inheritance of about $250,000 from her grandmother’s estate in a few months’ time. She is eyeing to buy a 1-bedder condominium so that she can stay on her own. The price of the property is $1,000,000. She is offered a 30-year mortgage loan of $750,000 at an interest rate of 1.3%.
(a) Analyse and discuss how the Mortgage Servicing Ratio (MSR) and Total Debt Service Ratio (TDSR) will impact her plan to purchase the $1m condo. Please show your workings.
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