Hello, Just checking to see if this answer is correct. Please see below:Problem 1: The following two figures illustrate historical home price trend and interest rate for the 30-years fixed rate mortgage in the United States. Based on the information, please answer the following questions if today were in 2013. Assuming that history will repeat itself, what do you think of the U.S. housing market for the next 10 years? How about mortgage rate for the next 10 years? Based on your prediction, answer the two questions below:a)If you have money, should you invest in the housing market?b)If your answer in a) is “Yes”, and one lender allows you to borrow money, should you borrow money to buy the property? Why? THE HISTORICAL PERSPECTIVE: 37 years, 3 cycles16%12%8%(1976Q1-2013Q1)4%Nominal year-over-year growth rate+12%Real year-over-year growth rateReal cumulative changes shown in boxes0%-4%-12%-8%+13-12%Real Growth =HPI Growth - CPI GrowthWhere:-16%-12%HPI Growth = In(HPI(t)/HPI(t-4))CPI Growth = In(CPI(t)/CPI(t-4))1976Q11977Q11978Q11979Q11980Q1+62%1981Q11983Q11984Q11985Q11986Q11987Q11988Q1-37%1990Q11992Q11993Q11994Q11995Q11996Q11997Q11998Q11999Q12000Q12001Q12002Q12004Q12005Q12006Q12007Q12003Q12008Q12009Q12010Q12011Q12012Q12013Q11982Q11989Q11991Q1 30-year Fixed Morgate Rate: 1971-201318%16%14%12%Historical average: 8.6%10%8%6%4%2%0%2013Q32012Q32011Q32010Q32009Q32008Q32007Q32006Q32005Q32004Q32003Q32002Q32001Q32000Q31999Q31998Q31997Q31996Q31995Q31994Q31993Q31992Q31991Q31990Q31989Q31988Q31987Q31986Q31985Q31984Q31983Q31982Q31981Q31980Q31979Q31978Q31977Q31976Q31975Q31974Q31973Q31972Q31971Q3

The mortgage rate is applied to the mortgage and is referred to as the rate which can be fixed and…

Hello, Just checking to see if this answer is correct. Please see below: Problem 1: The following two figures illustrate historical home price trend and interest rate for the 30-years fixed rate mortgage in the United States. Based on the information, please answer the following questions if today were in 2013. Assuming that history will repeat itself, what do you think of the U.S. housing market for the next 10 years? How about mortgage rate for the next 10 years? Based on your prediction, answer the two questions below: a)If you have money, should you invest in the housing market? b)If your answer in a) is “Yes”, and one lender allows you to borrow money, should you borrow money to buy the property? Why?

Hello, Just checking to see if this answer is correct. Please see below: Problem 1: The following two figures illustrate historical home price trend and interest rate for the 30-years fixed rate mortgage in the United States. Based on the information, please answer the following questions if today were in 2013. Assuming that history will repeat itself, what do you think of the U.S. housing market for the next 10 years? How about mortgage rate for the next 10 years? Based on your prediction, answer the two questions below: a)If you have money, should you invest in the housing market? b)If your answer in a) is “Yes”, and one lender allows you to borrow money, should you borrow money to buy the property? Why?

Survey of Accounting (Accounting I)

8th Edition

ISBN:9781305961883

Author:Carl Warren

Publisher:Carl Warren

Chapter15: Capital Investment Analysis

Section: Chapter Questions

Problem 15.3.1MBA

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