Problem 16. (5 points)

Maxim Sergeevich works as a financial manager in a large industrial company. He has long dreamed of acquiring a large plot of land with a house on it. Maxim Sergeevich saved money for a down payment on a mortgage for about two years, and finally, when a sufficient amount was in his account, he came across exactly the option he had been looking for. The bank manager, to whom Maxim Sergeevich turned for a mortgage, offered a sufficient amount for the purchase of the house for 5 years at 12.5% per annum. In the evening, Maxim Sergeevich's wife, Arina Anatolievna, told her husband that taking on debt was too risky, and their family owned a large package of shares in the company where Maxim Sergeevich works. The shares are preferred, and dividends are paid annually at a rate of 17%. The value of the share package is sufficient to fully cover the cost of the house, taking into account the existing savings and avoiding debt. Maxim Sergeevich disagreed with his wife. Who do you think is right in this situation: Maxim Sergeevich or Arina Anatolievna?
# Answer: Maxim Sergeevich.

## Comment:

The return on the stock portfolio is higher than the interest payments on the loan, therefore, the loan will be a cheaper source of funds for buying a house compared to selling the stock portfolio.

#