The coupon rate on mortgage is 7 and the mortgage matures


The purchase price of new house is $750,000. You paid $300,000 today and funded the remaining purchase by borrowing $450,000 from Bank. Assume annual mortgage payments. The coupon rate on mortgage is 7% and the mortgage matures in 30 years at which you think you can sell your home for $2.7million. Determine return on equity. How do we approach this?

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Finance Basics: The coupon rate on mortgage is 7 and the mortgage matures
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