Math Problem Statement
Assume that a property’s cash market value is $500,000 today. The current market based financing is a 5% interest rate with a 20-year term with monthly payments. Assuming that the seller is willing to owner finance the property at a 2% interest rate with a 20-year term with monthly payments, what is the estimated additional maximum cash value of this below-market financing on the property’s price? Answer only.
Solution
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Math Problem Analysis
Mathematical Concepts
Finance Mathematics
Present Value of Annuities
Loan Amortization
Formulas
Present Value of Annuity Formula: PV = PMT × [(1 - (1 + r)^-n) / r]
Theorems
Time Value of Money
Suitable Grade Level
College Level (Finance or Business courses)
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