A landlord wants advice on how she might decide whether to add an additional bathroom. The cost of the addition is $10,000. The interest rate is 5%. She can expect to get an additional $450 per annum rent as a result for the life of the bathroom.

a)Should she do the investment? (2%)

b)If the additional rents were $440 and interest rate is 5%, should she do the investment? (2%)

c)What would be the position if the interest rate were 4% and the additional rent is $450 per annum? (2%)