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1. Calculating the Return on Investment. Dave bought a rental property for $200,000 cash. One year later, he sold it for $240,000. What was the

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1. Calculating the Return on Investment. Dave bought a rental property for $200,000 cash. One year later, he sold it for $240,000. What was the return on his $200,000 investment? 2. Calculating the Return on Investment Using Financial Leverage. (Refer to Problem 1.) Suppose Dave invested only $20,000 of his own money and borrowed $180,000 interest-free from his rich father. What was his return on investment? 4. Calculating the Rate of Return on Investment Using Financial Leverage. Suppose Shaan invested just $10,000 of his own money and had a $90,000 mortgage with an interest rate of 8.5 percent. After three years, he sold the property for $120,000. a. What is his gross profit? b. What is his net profit or loss? c. What is the rate of return on investment? Problems 5 and 6 are based on the following scenario: Felice bought a duplex apartment at a cost of $150,000. Her mortgage payments on the property are $940 per month, $121 of which can be deducted from her income taxes. Her real estate taxes total $1,440 per year, and insurance costs $900 per year. She estimates that she will spend $1,000 each year per apartment for maintenance, replacing appliances, and other costs. The tenants will pay for all utilities. 5. Calculating Profit or Loss on a Rental Property. What monthly rent must she charge for each apartment to break even? 6. Calculating Profit or Loss on a Rental Property. What must she charge to make $2,000 in profit each year

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