The housing market is crazy right now! Sierra bought her condo for S250,000, 5 years ago. She paid a down payment of 10% of the cost of the house and took out a 30 yr. loan at 3.125% for the rest which she has been paying in monthly payments. Sierra realizes that she could sell her condo for $320,000 today. If she sells the condo she will first pay off what ever she still owes on the loan and the rest is hers to keep. What would her annual IRR be over the 5 years she owned the condo if she sells the condo today for $320,000 and she considers all of the amount she keeps to be profit?
The housing market is crazy right now! Sierra bought her condo for S250,000, 5 years ago. She paid a down payment of 10% of the cost of the house and took out a 30 yr. loan at 3.125% for the rest which she has been paying in monthly payments. Sierra realizes that she could sell her condo for $320,000 today. If she sells the condo she will first pay off what ever she still owes on the loan and the rest is hers to keep. What would her annual IRR be over the 5 years she owned the condo if she sells the condo today for $320,000 and she considers all of the amount she keeps to be profit?
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
Related questions
Question
7
Transcribed Image Text:The housing market is crazy right now! Sierra bought her condo for $250,000, 5 years ago. She
paid a down payment of 10% of the cost of the house and took out a 30 yr. loan at 3.125% for
the rest which she has been paying in monthly payments. Sierra realizes that she could sell her
condo for $320,000 today. If she sells the condo she will first pay off what ever she still owes on
the loan and the rest is hers to keep. What would her annual IRR be over the 5 years she
owned the condo if she sells the condo today for $320,000 and she considers all of the amount
she keeps to be profit?
Expert Solution
This question has been solved!
Explore an expertly crafted, step-by-step solution for a thorough understanding of key concepts.
This is a popular solution!
Trending now
This is a popular solution!
Step by step
Solved in 4 steps
Knowledge Booster
Learn more about
Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, finance and related others by exploring similar questions and additional content below.Recommended textbooks for you
Essentials Of Investments
Finance
ISBN:
9781260013924
Author:
Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher:
Mcgraw-hill Education,
Essentials Of Investments
Finance
ISBN:
9781260013924
Author:
Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher:
Mcgraw-hill Education,
Foundations Of Finance
Finance
ISBN:
9780134897264
Author:
KEOWN, Arthur J., Martin, John D., PETTY, J. William
Publisher:
Pearson,
Fundamentals of Financial Management (MindTap Cou…
Finance
ISBN:
9781337395250
Author:
Eugene F. Brigham, Joel F. Houston
Publisher:
Cengage Learning
Corporate Finance (The Mcgraw-hill/Irwin Series i…
Finance
ISBN:
9780077861759
Author:
Stephen A. Ross Franco Modigliani Professor of Financial Economics Professor, Randolph W Westerfield Robert R. Dockson Deans Chair in Bus. Admin., Jeffrey Jaffe, Bradford D Jordan Professor
Publisher:
McGraw-Hill Education