1. You purchase a house that costs $625,000 with a 8%, 30-year mortgage. In order to avoid PMI insurance, you decide to follow a conforming mortgage by making a down payment of 20%.
A) What is your monthly payment?
B) Amortize the first and second payments.
2. A project generates OCF's of $10 at the end of each year for the next four years. The project requires the immediate purchase of a fixed asset for $50, which will straight-line depreciate to zero over 10 years. You think you can sell the asset for $40 after four years. Tax rate is 35%. If investors require 15% annual return, what is the NPV of the project (there is no NWC required for this project)?