A few years out of UCCS youre earning $125,000 and decide to buy a condominium. The one you like will cost $300,000. The

bank will require a 15% down payment and will lend you the difference in a 30yr traditional mortgage at an interest rate of

4.800%(M).

For three years from the day you bought the condo, Colorado real estate continues to climb. Your condo appreciates 4% every

year for three years. And, interest rates fall to 3.60%(M). You decide to refinance your mortgage. You can refinance into a new

mortgage for (again) 85% of the current market value of the condo.

Now seven more years have passed, a total of ten years since you bought the condo. The real estate market slowed down and

then it crashed. For the next 6 years, your condo appreciated at 1% per year, but then over-building finally caught up with

Colorado and in year 10 the housing market fell 20%. You pay a broker a 5% commission to sell the condo. You also have closing

costs of $2,500.

Q: You made an initial cash outflow (the down payment) and ten years later had cash in the bank. Your initial investment is PV (a negative number), the final cash back is FV (a positive number), and 10 years passed. What was the % return each year? In other words, using TVM, solve for annual I (to three decimal places).