QUESTION TWO Finozest Solutions wish to purchase an apartment in Kabulonga which is situated in...
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QUESTION TWO
Finozest Solutions wish to purchase an apartment in Kabulonga which is situated in a tree-lined avenue. The purchase price, with costs, is K710,000 and it is able to obtain a 100% mortgage loan at an interest rate of 6%, interest compounded monthly. The term of the loan is 20 years. The property values are expected to rise at a rate of 9% per year (0.75% per month). Finozest Solutions will be able to rent out the apartment after costs at a rate of K4,000 per month for the first year. Interest and rent are payable at the beginning of each month.
Required:
What is the expected value of the apartment in 20 years-time? What is the mortgage loan repayment at the beginning of each month? What is the net amount that Finozest Solutions has to pay in each month.
Total [20 marks]
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