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    Time Value of Money The Buy Versus Rent Decision Student 1

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    Cristhian Javier
    This document compares the costs of buying versus renting a condo over various time periods and under different housing price change scenarios. It outlines the purchase price, fees, taxes, monthly payments, opportunity costs and net present value of buying versus renting under base assumptions and four alternative scenarios where the condo price changes by different amounts over 10 years. The analysis seeks to determine whether buying or renting generates higher costs and under what housing market conditions each option makes more financial sense.

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    Time Value of Money The Buy Versus Rent Decision Student 1

    Uploaded by

    Cristhian Javier
    448 views1 page
    This document compares the costs of buying versus renting a condo over various time periods and under different housing price change scenarios. It outlines the purchase price, fees, taxes, monthly payments, opportunity costs and net present value of buying versus renting under base assumptions and four alternative scenarios where the condo price changes by different amounts over 10 years. The analysis seeks to determine whether buying or renting generates higher costs and under what housing market conditions each option makes more financial sense.

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    306738620-Time-Value-of-Money-The-Buy-Versus-Rent-Decision-Student-1.xlsx

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    This document compares the costs of buying versus renting a condo over various time periods and under different housing price change scenarios. It outlines the purchase price, fees, taxes, monthly payments, opportunity costs and net present value of buying versus renting under base assumptions and four alternative scenarios where the condo price changes by different amounts over 10 years. The analysis seeks to determine whether buying or renting generates higher costs and under what housing market conditions each option makes more financial sense.

    Copyright:

    © All Rights Reserved
    Download as XLSX, PDF, TXT or read online from Scribd
    Download as xlsx, pdf, or txt
    448 views1 page

    Time Value of Money The Buy Versus Rent Decision Student 1

    Uploaded by

    Cristhian Javier
    This document compares the costs of buying versus renting a condo over various time periods and under different housing price change scenarios. It outlines the purchase price, fees, taxes, monthly payments, opportunity costs and net present value of buying versus renting under base assumptions and four alternative scenarios where the condo price changes by different amounts over 10 years. The analysis seeks to determine whether buying or renting generates higher costs and under what housing market conditions each option makes more financial sense.

    Copyright:

    © All Rights Reserved
    Download as XLSX, PDF, TXT or read online from Scribd
    Download as xlsx, pdf, or txt
    of 1

    Time Value of Money: Buy versus Rent by Sean Cleary and Stephen Foerster, Ivey Publications, August 11,

    2014

    Question
    (4) Principal Outstanding (5a) NPV - No Change in Price
    Initially After 2 years After 5 Years After 10 Years 2 years 5 years 10 years
    Purchase Price 600000 Selling Price
    Legal fees 2000 Realtor Fees (@5%)
    Deed transfer tax (@3%) Other Selling fees
    Down Payment (20%) Princ OS
    Total Due at Closing Net Proceeds
    Amortization Period (Years) 25
    Payment Frequency 12 Funds at Closing
    Number of Payments remaining Opportunity Cost of Extra Payments Incl. Funds Used at Initial Closing

    Mortgage Amount Princ OS Net FV

    Quoted Rate 4% PV of Future Net (NPV)


    Eff. Monthly rate
    (5b) 10% down, back to 600k, then up 10%
    (1) MonthlyMortgage Payments 2 years 5 years 10 years
    Selling Price
    Monthly Condo Fees 1055 Realtor Fees (@5%)
    Monthly Taxes 300 Other Selling fees
    Monthly Repairs etc. 50 Princ OS
    Net Proceeds
    Total Monthly Payments if Buy
    Funds at Closing
    Monthly Rent 3000 Opportunity Cost of Extra Payments Incl. Funds Used at Initial Closing

    Net Additional Payments Net FV

    (2) Monthly Opportunity Costs of PV of Future Net (NPV)


    240000 (Closing Costs + Down Pmt)
    (5c) Condo price increases 2% annually
    (3) TOTAL Additional Monthly CF "costs" 2 years 5 years 10 years
    Selling Price
    Realtor Fees (@5%)
    Other Selling fees
    Princ OS
    Net Proceeds

    Funds at Closing
    Opportunity Cost of Extra Payments Incl. Funds Used at Initial Closing

    Net FV

    PV of Future Net (NPV)

    (5d) Condo price increases 5% annually


    2 years 5 years 10 years
    Selling Price
    Realtor Fees (@5%)
    Other Selling fees
    Princ OS
    Net Proceeds

    Funds at Closing
    Opportunity Cost of Extra Payments Incl. Funds Used at Initial Closing

    Net FV

    PV of Future Net (NPV)

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