A friend of yours bought a house for $$200,000$ on Jan $1,2020.$ She paid $$40,000$ and the mortgage $($money borrowed to purchase the house$)$ is $$160,000.$ She formed a rental business on Jan $1,2020$ with the house and the mortgage as its only asset and liability.

$1.$ How much is her equity in the business?

Net rental income $($rental income minus all house related expenses: repairs, utilities, taxes, insurance, etc.$)$ is $$10,000.$ In addition, she paid $3\%$ interest on the mortgage debt. Assume she did not pay back any debt in $2020.$

$2.$ Compute ROA $($return on asset$)$ and ROE $($return on equity$)$ for her rental business. You may use beginning asset$/$equity balances as denominators. Show computations.

$3.($If your calculations show higher ROE,$)$ Explain why her ROE is higher than ROA $.$

$($If your calculations show higher ROA,$)$ Explain why her ROE is lower than ROA $.$