1. Sultan purchased a house for $180,000 A similar home in Baltimore County would have cost him $18,000 to amt annually. He had to pay $2,000 each year for upkeep of his home. By the end of the first year, the market price of his house was $240,000. What was his return for the first year (considering assumed rents)?
2. Justin cams $150,000 a year. He would like to purchase a home and applies for a mortgage from the bank. The bank requires that the debt not exceed 28 percent of his annual income. With the current down payment he is willing to pay his monthly mortgage payment will be $2, 700. In addition, he will have to pay $1, 500 annually for tax and insurance. Will the bank approve his loan? Why or why not? Use valid numbers from this problem to support your answer.
3. Kalyn invests in an office complex. She pays $1, 200,000 for the building. The building will bring net income of $80,000. annual depreciation of $30,000. annual taxes of $24,000. and annual interest payments of $24,000. What is the building's cap rate?
4. Nicholas is thinking about buying solar panels for his roof. I he panels will cost $5,000 today and would generate the following savings:
Year Amount
1 $3,000
2 $2,000
3 $1,000
If the appropriate discount rate is 22 percent, what arc the IRK, NPV, and profitability index (PI) for this decision? Should Nicholas make the purchase? Why or why not?
5. Montana can get a new Ninja 1000 (i.e., motorcycle) for $12,000 if purchased today. He could wait to purchase the motorcycle four years from now for $ 17,000. If Montana can invest in the capital markets and earn a 6 percent return, should he purchase the hike today or four years from now? Montana is indifferent about whether he owns the car today or in four years. He just wants to make the best financial decision given that he plans to do it at one of these points in time. Show numbers to support your answer.