On January 1, Pete Rowe bought a ski chalet for $51,000. Pete is renting the chalet for $55 per night. He estimates he can rent the chalet for 190 nights. Pete's mortgage for principal and interest is $448 per month. Real estate tax on the chalet is $500 per year. Pete estimates that his heating bill will run $60 per month. He expects his monthly electrical bill to be $20 per month. He pays $12 per month for cable television. a. What is Pete's return on the initial investment for this year? (Round your answer to the nearest tenth percent.) Pete's return % b. Assume rentals drop by 30% and monthly bills for heat and electricity drop by 10% each month. What would be Pete's return on initial investment? (Round your answer to the nearest tenth percent.) Pete's return %
On January 1, Pete Rowe bought a ski chalet for $51,000. Pete is renting the chalet for $55 per night. He estimates he can rent the chalet for 190 nights. Pete's mortgage for principal and interest is $448 per month. Real estate tax on the chalet is $500 per year. Pete estimates that his heating bill will run $60 per month. He expects his monthly electrical bill to be $20 per month. He pays $12 per month for cable television. a. What is Pete's return on the initial investment for this year? (Round your answer to the nearest tenth percent.) Pete's return % b. Assume rentals drop by 30% and monthly bills for heat and electricity drop by 10% each month. What would be Pete's return on initial investment? (Round your answer to the nearest tenth percent.) Pete's return %
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Question
![On January 1, Pete Rowe bought a ski chalet for $51,000. Pete is renting the chalet for $55 per night. He estimates he can rent the
chalet for 190 nights. Pete's mortgage for principal and interest is $448 per month. Real estate tax on the chalet is $500 per year. Pete
estimates that his heating bill will run $60 per month. He expects his monthly electrical bill to be $20 per month. He pays $12 per
month for cable television.
a. What is Pete's return on the initial investment for this year? (Round your answer to the nearest tenth percent.)
Pete's return
%
b. Assume rentals drop by 30% and monthly bills for heat and electricity drop by 10% each month. What would be Pete's return on
initial investment? (Round your answer to the nearest tenth percent.)
Pete's return
%](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2Fc4b6db93-ec39-4173-b6f0-4260332b7f4f%2Fa22459e5-bdca-4813-9158-1104a7637af4%2Fq9hblzs_processed.png&w=3840&q=75)
Transcribed Image Text:On January 1, Pete Rowe bought a ski chalet for $51,000. Pete is renting the chalet for $55 per night. He estimates he can rent the
chalet for 190 nights. Pete's mortgage for principal and interest is $448 per month. Real estate tax on the chalet is $500 per year. Pete
estimates that his heating bill will run $60 per month. He expects his monthly electrical bill to be $20 per month. He pays $12 per
month for cable television.
a. What is Pete's return on the initial investment for this year? (Round your answer to the nearest tenth percent.)
Pete's return
%
b. Assume rentals drop by 30% and monthly bills for heat and electricity drop by 10% each month. What would be Pete's return on
initial investment? (Round your answer to the nearest tenth percent.)
Pete's return
%
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Calculation of return on investment:
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