Which of the following statements is true for a conventional mortgage?
1. none of these
2. As the years pass, the ratio of interest to principal repayment will decline
3. The ratio of interest to principal repayment remains constant over the entire period.
4. As the years pass, the ratio of interest to principal repayment will increase.
2. Sue purchased a house for $89,000, spent $56,000 upgrading it, and currently had it appraised at $212,900. The house is being rented to a family for $1,200 a month, the maintenece expenses average $200 a month, and the property taxes are $4,800 a year. If she sells the house she will incur $20,000 in expenses. She is considering converting the house into professional office space. What opportunity cost, if any, should she assign to this property if she has been renting it for the past two years?
1. $192,900
2. $232,900
3. $178,500
4. $185,000
5. $120,000