(a) John, aged 70, has a house worth $500,000. He intends to borrow $100,000 as a...
(a) John, aged 70, has a house worth $500,000. He intends to borrow $100,000 as a lump sum. If the interest rate is 10% p.a. payable annually (i=10%), and house prices increase by 3% p.a. (f = 3%), what is the percentage equity in 15 years?
Homework Answers
Current worth of house=$500,000
Annual increase of house price=3%=0.03
Value of house after 15 years=500000*(1.03^15)=$778,984
Interest rate on loan=10%
Amount of Loan =$100,000
Loan Balance after 15 years=100000*(1.1^15)=$417,725
Home Equity =778984-417725=$361,259
Percentage of Equity =(361259/778984)*100%=46.38%
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(a) John, aged 70, has a house worth $500,000. He intends to
borrow $100,000 as a...
(a) John, aged 70, has a house worth $500,000. He intends to borrow $100,000 as a lump sum. If the interest rate is 10% p.a. payable annually (i=10%), and house prices increase by 3% p.a. (f = 3%), wh...
(a) John, aged 70, has a house worth $500,000. He intends to borrow $100,000 as a lump sum. If the interest rate is 10% p.a. payable annually (i=10%), and house prices increase by 3% p.a. (f = 3%), what is the percentage equity in 15 years?
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