ANALYZE PROJECT VIABILITY (ON EXCEL)
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Option A
You can purchase a new building within the city limits for $525,000.
The city will offer a special incentive reducing the price by $25,000.
The city will finance the building over a period of 20 years at a 5.25% APR
Should you pay the loan off 5 years early the city will rebate you an additional 10% of the purchase price
Option B
A local builder has agreed to build to your specs for a cost of $475,000.
A local bank has agreed to finance the project for 15 years at a 4.95%APR
There is no early payoff bonus with the bank.
Compute the payments for each option.
Compute the total cost for each loan and calculate based on paying off option A in 15 years.
Calculate an investment based on paying both loans in 15 years and invest the difference in the two loans in a 5 year CD paying 3.00%.
Create a logical statement saying either yes or no. Set the statement to based the yes or no on the lowest payment that you calculate.
Thank you for the previous assistance can you please assist with this as well? I misunderstood the initial homework question and I am struggling with this part as well.
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Solution Summary
ption A
You can purchase a new building within the city limits for $525,000.
The city will offer a special incentive reducing the price by $25,000.
The city will finance the building over a period of 20 years at a 5.25% APR
Should you pay the loan off 5 years early the city will rebate you an additional 10% of the purchase price
Option B
A local builder has agreed to build to your specs for a cost of $475,000.
A local bank has agreed to finance the project for 15 years at a 4.95%APR
There is no early payoff bonus with the bank.
Compute the payments for each option.
Compute the total cost for each loan and calculate based on paying off option A in 15 years.
Calculate an investment based on paying both loans in 15 years and invest the difference in the two loans in a 5 year CD paying 3.00%.
Create a logical statement saying either yes or no. Set the statement to based the yes or no on the lowest payment that you calculate.
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