You wish to purchase an apartment in Port Elizabeth which is situated on a tree-lined...
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You wish to purchase an apartment in Port Elizabeth which is situated on a tree-lined avenue. The purchase price, with costs, is R710 000, and you can obtain a 100% mortgage loan at an interest rate of 6%, interest compounded monthly. The term of the loan is 20 years. Assume that property values are expected to rise at a rate of 9% per year (0.75% per month). You will be able to rent out the apartment after costs at a rate of R4 000 per month for the first year. Interest and rent are payable at the beginning of each month. Required: What is the expected value of the apartment in 20 years' time? What is the mortgage loan repayment at the beginning of each month? What is the net amount you have to pay each month?
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