A house and lot are for sale for $155,000. It is estimated that $45,000 is the value

Question:

A house and lot are for sale for $155,000. It is estimated that $45,000 is the value of the land and $110,000 is the value of the house. If purchased, the house can be rented to provide a net income of $12,000 per year after taking all expenses, except depreciation, into account. The house would be depreciated by straight line depreciation using a 27.5-year depreciable life and zero salvage value. Mary Silva the prospective purchaser, wants a 10% after-tax rate of return on her investment after considering both annual income taxes and a capital gain when she sells the house and lot. At what price would she have to sell the house at the end of 10 years to achieve her objective? You may assume that Mary has an incremental income tax rate of 27% in each of the 10 years.

Depreciation
Depreciation is an important concept in accounting. By definition, depreciation is the wear and tear in the value of a noncurrent asset over its useful life. In simple words, depreciation is the cost of operating a noncurrent asset producing... Salvage Value
Salvage value is the estimated book value of an asset after depreciation is complete, based on what a company expects to receive in exchange for the asset at the end of its useful life. As such, an asset’s estimated salvage value is an important...