Assume you are 22 years old. In 8 years, you’d like to purchase the lot next to your parents beach house. Currently, the lot’s value is $350,000, but it will appreciate by 5% per year.You want to buy the lot at FMV with an amortized loan. You’re going to save up $25,000 as a down payment for the lot.
a. What monthly payment will you have to make on the loan with an APR of 5.4% over 30 years?
b. How much interest will build over time on the loan?
c. How much will the lot cost you in total?