Answer:
$109,688.89
Explanation:
According to the scenario, computation of given data are as follows,
Formula for Net present value are as follows,
NPV = -Investment in fixed asset - Net working Capital + Operating cashflow × ( 1 - ) ÷ r + Net working capital ×
Where, r = rate of return
n = number of years
By putting the value, we get
NPV = -28,000 - 2,800 + 32,500 × ( 1 - ) ÷ 0.14 + 2,800 ×
By solving the above equation, we get
NPV = $109,688.89
A mortgage of $80,000 with 2 points means the borrower would have to pay at closing $800 is false because the real pay at closing is $1,600.
<h3>What is mortgage?</h3>A mortgage is a loan that is used to buy or to maintain a land, home, or other sort of real estate.
The borrower checks to refund the lender over a period of time, usually in an ordination of regular installments divided into principal and interest. The property is used as security for the loan.
According to the given information,
Mortgage Amount = $80,000
Points = 2
Let the 2 points is taken as a percentage:
Point 1 = 1%, and
Point 2 = 2%
Now, as we know that in the loan process, the amount of point is cyphered at the closing. Then, the closing cost is commuted as:
Therefore, the given problem is false, that the borrower have to pay $800, he would have to pay only $1,600.
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