A house worth $$700$k is expected to earn $$90$k pa gross rent revenue and incur rental costs of $$10$k pa over the next year. Note that the units $\text{'}$k$\text{'}($Greek kilo$)$ represent thousands. Assume that these cash flows are expected one year from now, so they$$re received and paid annually in arrears.

If the gross rent revenue and costs increase by $1\%$ per annum and houses can be valued as a perpetuity, what is the internal rate of return $($IRR$)$ of this house asset? Ignore taxes.

Question $1$Select one:

a$.$

$11\mathrm{.}428571\%$ pa

b$.$

$12\mathrm{.}428571\%$ pa

c$.$

$12\mathrm{.}552857\%$ pa

d$.$

$80\%$ pa

e$.$

$90\%$ pa