Logo
Home Study Material Contact Search
AI Chat FREE
  1. business
  2. accounting
  3. 2. suppose you bought a condo for $100,000 financi

2. Suppose you bought a condo for $100,000 financing it with a $20,000 down payment...

90.2K

Verified Solution

Question

Accounting

image
2. Suppose you bought a condo for $100,000 financing it with a $20,000 down payment of your own funds and an $80,000 mortgage loan from a bank. (10 points) a. Assume that the market value of your condo has now risen to $120,000. Ignoring interest and other costs, and assuming the loan amount is still $80,000, calculate your rate of return on your asset (ROA) and your rate of return on equity (ROE). b. Now assume that, instead of (a), you only put down $10,000 and borrowed $90,000 to buy the condo. Assuming that the market value of your house has risen to $120,000 and ignoring interest and other costs, calculate your rate of return on your asset (ROA) and your rate of return on equity (ROE). c. Now, instead of (a) or (b), suppose the value of the condo fell from $100,000 to $70,000. Assuming you paid $100,000, financing it with $20,000 of your own money and $80,000 with a mortgage loan, and ignoring interest and other costs, calculate your rate of return on your asset (ROA) and your rate of return on equity (ROE). What is the value of your equity stake in the condo after the price fall? All your answers should be expressed in percent

Answer & Explanation Solved by verified expert
Get Answers to Unlimited Questions

Join us to gain access to millions of questions and expert answers. Enjoy exclusive benefits tailored just for you!

Membership Benefits:
  • Unlimited Question Access with detailed Answers
  • Zin AI - 3 Million Words
  • 10 Dall-E 3 Images
  • 20 Plot Generations
  • Conversation with Dialogue Memory
  • No Ads, Ever!
  • Access to Our Best AI Platform: Flex AI - Your personal assistant for all your inquiries!
Become a Member

Other questions asked by students

Q

Does the Carboxylic acid of tyrosine get deprotonated by NaH? If so, why is it not...

Chemistry
Q

1. The individual labor supply curve will be negatively sloped if the substitution effect of wages...

Economics
Q

Near the end of 2011, the management of Simid Sports Co., a merchandising company, prepared the...

Accounting
Q

More Complicated Prisms Anas Al Tibawi A triangular pris

Geometry
Q

Listen If an equation of the tangent line to the curve y f x at...

Calculus
Q

3 2 6 5 32 2 2 3 5 6 At the point shown on...

Calculus
Q

Solve the equation for all real solutions in simplest form 2 p 5p 3 0

Algebra
Q

Magpie Corporation uses the total cost concept of product pricing. Below is the cost information...

Accounting
Q

Comparative data on three companies in the same service industry are given below. Required: 2....

Accounting
Q

For each of the following independent cases (A-E), compute the missing values in the table

Accounting
Q

(4) Inventory policy on desired ending inventory balances: Type ...

Accounting
Q

A rate less than 11.31% or a rate greater than 12.79% A rate equal to...

Finance