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You are considering the purchase of a property today for $300000 You plan to finance it with an 80 percent loan The appreciation rate on the property value is expected to be 4 percent annually

You are considering the purchase of a property today for $300,000. You plan to finance it with an 80 percent loan. The appreciation rate on the property value is expected to be 4 percent annually for the next three years. a. Approximate the expected annual average rate of appreciation on home equity for the next 3 years. b. What if you now think that a $300,000 purchase price may be somewhat high and that if you pay this price, the expected appreciation rates in your house price will be as follows: year 1 = 0%, year 2 = 2%, and year 3 = 3%. How will your answer to part (a) change?

Mar 29 2020 View more View Less

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