A married couple, Susie and Bob, have purchased a house that will be rented. The selling price of the house is $90,000 and a $20,000 down payment is made. It is estimated that the house has a value of $75,000 and the land is valued at $15,000. Only the house value is depreciated. The loan is for 30 years at a 9% fixed rate. Taxes, insurance, and maintenance are estimated to be $3,500 per year. Susie and Bob have an average tax rate of 28% on their net income. Straight line depreciation with a 30-year life is used for the house. They plan on renting the house for $925 per month. If the house appreciates at a rate of 6% per year, and it is sold in 10 years, determine the following:

a. The monthly mortgage payment

b. The total costs and revenues per year for the house

c. The proposed Income Statement for the investment

d. The estimated selling price of the house in 10 years

e. The after-tax cash flow for the investment

f. The tax owed at the 20% capital gain rate when the house is sold.

g. The after-tax ROI for the investment

h. What other factors should Susie and Bob consider?