Hello Everyone, This is my first post here.
I have a hypothetical problem regarding the sale of a house. There are two scenarios involved and I would like to calculate the best outcome for the seller. OK, so here's the situation. I have a house for sale for $400,000. Scenario 1 is where a buyer approaches me and says he'll give me 10% more than the asking price but wants to pay it off over 10 years at zero interest. Payments are to made monthly. So what we have is 440,000 divided by 120. This gives a monthly payment of $3667.00 for ten years.
Scenario two is where I sell the house for the asking price of $400,000, put the funds into an interest bearing account that pays 5%. This interest is calculated daily and is paid monthly. Now after the first month in this account I will be drawing out $3667.00 and every month after that until the funds are depleted.
The question is, will the funds from scenario two run out first, and what would be the outcome after ten years of this arrangement? Can anyone give me spreadsheet details on this? I find this most interesting.
Thanks again for the help.