The buyer of a piece of real estate is often given the option of buying down the loan. This option gives the buyer a choice of loan terms in which various combinations of interest rates and discount points are offered. The choice of how many points and what rate is optimal is often a matter of how long the buyer intends to keep the property. Darrell Frye is planning to buy an office building at a cost of $982,000. He must pay 10% down and has a choice of financing terms. He can select from a 9% 30-year loan and pay 4 discount points, a 9.25% 30-year loan and pay 3 discount points, or a 9.5% 30-year loan and pay 2 discount points. Darrell expects to hold the building for three years and then sell it. Except for the three rate and discount point combinations, all other costs of purchasing and selling are fixed and identical. (Round your answers to the nearest cent. Use

You are interested in purchasing an automobile but you require financing.  The dealer has provided you with several loan options to finance the purchase.  Your market rate of return for the risk that you pose various lenders is 7%;    The automobile that you want to purchase has a sticker price of $35,000 and a competitive market value of $31,000.    Here are your loan options Loan 1:   loan has a term of 60 months, a contractual rate of interest of 8% and requires a down payment of $1500 for the purchase of the car.  The loan allows you to claim a rebate of $1000 on the car at purchase. Loan 2:   The loan has a term of 72 months, a contractual rate of 7.5% and requires a down payment of $1000 for the purchase of the car.   The loan allows you to claim a $500 rebate Loan 3:   The loan has a term of 36 months a contractual interest rate of 0% and requires $4000 down.   No rebate is available for this option.  If you chose loan 1, and decide to pay the loan off early (after you've made…

Jason Searcy buys a condominium for $96,200. He makes a 5% down payment, and pays these closing costs: property survey, $315; insect inspection, $190; legal fees, $525; and title insurance, $225. a. What is the down payment amount? b. What are the total closing costs? c. What is the total cash amount needed to buy the condominium?

The Petersik family is considering purchasing a second home to use for short term rentals near the beach. If it purchases the house, they will place a down payment of $64,000 on the house. They estimate they will get an annual net rental profit of $8,500 after their mortgage and expenses are paid. After 18 years, they plan to pass the rental home along to their children, so assume the home has negligible salvage value. What would be the ERŘ if the Petersik family decides to invest in a rental home, assuming they keep the home for 18 years? Assume their MARR is 13%. Should the Petersik family invest in the rental home?