assignment 3

Problem 1

Eva is considering buying a house while she is at University. She plans to live in the house and also rent to her friends. The house will cost $400,000 to purchase and it has 4 bedrooms {3 she can rent]. She will pay cash forthe house! She estimates that she can earn $21000 per year in rental income. She estimates that her expenses will be $20,000 per year. At the end of 4-years she estimates that she will be able to sell the house for $440,000.| if she uses a MARE of 5% compounded monthly, is this a good plan