An investor has invested $250,000 in a new rental property. Her estimated annual costs are $6000 and annual revenues are $20,000. What rate of return per year will the investor make over a 30-year period ignoring the salvage value? If the property can be sold for $200,000 what is the rate of return?
An investor has invested $250,000 in a new rental property. Her estimated annual costs are $6000 and annual revenues are $20,000. What rate of return per year will the investor make over a 30-year period ignoring the salvage value? If the property can be sold for $200,000 what is the rate of return?
Essentials Of Investments
11th Edition
ISBN:9781260013924
Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Chapter1: Investments: Background And Issues
Section: Chapter Questions
Problem 1PS
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Hello can anyone please help me with this question I'm really confused thanks
Transcribed Image Text:An investor has invested $250,000 in a new rental
property. Her estimated annual costs are $6000 and
annual revenues are $20,000. What rate of return per
year will the investor make over a 30-year period
ignoring the salvage value? If the property can be
sold for $200,000 what is the rate of return?
Sagid Sadri
Expert Solution
Step 1
Net present worth: It is the present value (PV) of the cash inflows compared to the initial value of the investment, at a required rate of return for the project.
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