Jordan and Mike are both planning on attending university in Calgary. Jordan’s parents rent him a
one bedroom apartment for $750 per month. Mike’s parents bought a 3 bedroom house for
$285000 and made a down payment of 10%. The remaining amount was mortgaged over 20 years
at an annual rate of 4.15% compounded semi-annually for a 5 year term. They rented the other two
rooms out for $600 each per month. The house depreciated in value by 1.5% a year and the cost of
taxes and maintenance averaged $3000 a year. Show step by step
c. How much was left to pay on the mortgage after 5 years?
(use your financial application and fill in the appropriate inputs)
N ________ I% _________ PV ________ PMT __________
FV ________ P / Y ________ C / Y _________
d. How much had the house lose in value [money] over the 5 years?
e. Assuming the house was sold at market value after 5 years, how much would Mike’s parents
receive from the sale?
f. How much did Mike’s parents have to subsidize the rent for the 5 year term?