You’ve spent $10,000 searching for an investment property. Now, you’re considering investing in a cottage near Brighton Beach. You can buy the house for $300,000 with cash, earn $20,000 per year in rent and pay $7,000 per year in HOA, taxes, and other expenses. Assume you’ll be able to sell the house in ten years for $400,000 (the "salvage value"). Your second-best investment alternative would earn a return of 6.50%. Calculate in Excel the NPV and IRR of this investment.
Mortgages
A mortgage is a formal agreement in which a bank or other financial institution lends cash at interest in return for assuming the title to the debtor's property, on the condition that the obligation is paid in full.
Mortgage
The term "mortgage" is a type of loan that a borrower takes to maintain his house or any form of assets and he agrees to return the amount in a particular period of time to the lender usually in a series of regular equally monthly, quarterly, or half-yearly payments.
1.You’ve spent $10,000 searching for an investment property. Now, you’re considering investing in a cottage near Brighton Beach. You can buy the house for $300,000 with cash, earn $20,000 per year in rent and pay $7,000 per year in HOA, taxes, and other expenses. Assume you’ll be able to sell the house in ten years for $400,000 (the "salvage value"). Your second-best investment alternative would earn a return of 6.50%.
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