5. Jane and Mike purchase identical houses for $400,000. Jane makes a down payment of...
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5. Jane and Mike purchase identical houses for $400,000. Jane makes a down payment of $80,000, while Mike puts down only $20,000; for each individual, the down payment is the total of his or her net worth and each finances the remainder of the house price with a mortgage. Assuming everything else is equal, who is more highly leveraged? If house prices in the neighborhood immediately fall by 10 percent (before any mortgage payments are made), what would happen to Jane's and Mike's net worth? (LO2)
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