The Carpenter family purchased a house 20 years ago for $150,000. Prices in the housing market in their area have increased by an average 4% annually. If they would like to sell their house this year, what is the house's market value assuming its value has increased at the same rate as the housing market in their area?

The Carpenter family purchased a house 20 years ago for $150,000. Prices in the housing market in their area have increased by an average 4% annually. If they would like to sell their house this year, what is the house's market value assuming its value has increased at the same rate as the housing market in their area?

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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Similar questions

If an average home in your town currently costs $350,000, and house prices are expected to grow at an average rate of 3 percent per year, what will an average house cost in "5" years?
You own a home with a market value of $100,000. you bought the home for $150,000 ten years ago. your houses assessed value is $85,000. your property tax rate is 3.5%. how much would you save per year if you moved to an area with a 2.7% property tax?
What should you do if you own a piece of land that you bought 5 years ago for $50,000. The tax rate is 30% and you can assume you have sufficient other income to take advantage of all tax effects. Your after-tax discount rate is 7%.a. You can sell the land today for $200,000. b. You believe the land will be worth $275,000 in five years because you expect a new shopping center to be built next to your land, so You can wait and sell the land at that time (in 5 years).
A young couple just had their first baby and is looking for additional income. They are considering renting out the space above their garage as an apartment. To convert the space, the couple will have to invest $30,000.00 today. It will take one year before they can begin renting the space. Let’s suppose that they can rent the apartment for $5,000.00 per year for ten years. (first payment will be in one year)). What is the IRR of this investment?
Assume that the average price of a new home is $158,500. If the cost of a new home is increasing at a rate of 10% per year, how much will a new home cost in eight years?
You just bought a $900,000 house in Philly. You financed your purchase with a loan. Assume that houses in Inland Empire increase at the rate of 5.30 percent a year. Your downpayment rate at the time of house purchase was 40 percent. (a) The expected appreciation rate on home price next year equals ______ percent. (Round to two decimal places. (b) The expected rate of appreciation on your home equity next year equals # ____% (c) TRUE OR FALSE? The lower the loan-to-value ratio, the higher the rate of appreciation on your home equity next year. This statement is _____
According to an old myth, Native Americans sold theisland of Manhattan about 400 years ago for $24. Ifthey had invested this amount at an interest rateof 7 percent per year, how much, approximately,would they have today?
Some time ago. Tracie purchased two acres of land costing $67,900. Today, that land is valued at $64,800. How long has she owned this land if the price of the land has been decreasing by 1.5 percent per year?
Your mother wants to buy a car which will cost $15,000 five years from today. She would like save $2,450 at the end of each year (for the next five years) in an account, so as to have the amount she needs. What interest (to the closest percent) must she earn in this account to achieve this financial objective?
Mr. chan wants to purchase a house after a couple of years. his target house value is P4,975,193. He decides to invest in a product where he can deposit yearly P592796 starting at the beginning of each year until year 13. he wants to know what is the present value of the annuity investment that he is doing. this would enable him to know what the true cost of the property in today's term is. you are required to do the calculation of the present value of the annuity due that mr. chan is planning to make. assume that the rate earned on investment will be 9.87%. Write your answer in two decimal places
Four years ago, when you were 24, you graduated from college and landed a good paying job. At that time you purchased your “starter home” for $200K. Since then, the housing market in the city where your home is located experienced unusually high rate of price appreciation and a local real estate agent informed you that if you were to put your home on the market today, you will be able to sell it for about $350K. a. Did the recent abnormal housing price appreciation benefited you? Explain in 3-4 sentences. b. What kind of individuals benefited the most from the recent price appreciation described in this question? Explain in 2-3 sentences. c. What kind of individuals suffered the most from the recent price appreciation described in this question? Explain in 2-3 sentences.
Sally Seashell bought a lot at the Salty Sea for $50,000 cash. She does not plan to build on the lot, but instead will hold it as an investment for 25 years. She wants a 10% after-tax rate of return after taking the 6% annual inflation rate into account. If income taxes amount to 15% of the capital gain, at what price must she sell the lot at the end of the 10 years?

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