Time-share sales provide an opportunity for vacationers to own a resort condo for 1 week (or more) each year forever. The owners may use their week at their own condo or trade the week and vacation elsewhere.
Time-share vacation sales usually require payment in full or financing through the time-share company, and interest rates are usually in the 13% to 18% range. Suppose the cost to buy a 1-week time share in a 3-bedroom condo is $21,833. Also suppose a 10% down payment is required, with the balance financed for 15 years at 16.5%, compounded monthly.
(a) Find the monthly payment.
(b) Determine the total cost over the life of the loan.
(c) Suppose maintenance fees for this condo are $400 per year. Find the annual cost of the condo over the life of the loan. Assume that the annual maintenance fees remain constant.
(d) Use part (c) and the 10% down payment to determine the average annual cost for having this vacation condo for 1 week over the life of the loan.
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