Question
1). You are looking to buy real-estate property to rent out that will cost $90,000. The property is expected to produce annual rent cash flows
1). You are looking to buy real-estate property to rent out that will cost $90,000. The property is expected to produce annual rent cash flows of $8,000 in Year 1, $8,400 in Year 2, and $8,800 in Year 3, at which point you will sell the property for $92,000. If your bank quotes you a mortgage rate of 6.50% per year, what is the dollar return you can expect on your investment (NPV)? Additionally, should you buy the property?
$8,364.86, yes buy the property | ||
$8,364.86, no do not buy the property | ||
-$7,854.33, yes buy the property | ||
$7,854.33, no do not buy the property |
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