Assume you buy a house for $580,000 and have $116,000 as a down payment. Your mortgage rate is 3 percent APR compounded semi-annually and you amortize the mortgage over 25 years with monthly payments. You will assume that you could have earned 5 percent EAR on the down payment (opportunity cost), your marginal income tax rate is 40 percent, real estate fees are 4 percent +HST, and property taxes will be $5,800 annually for this calculation. Ignore maintenance costs.

a. What is the true return on your investment if you sell it in 6 years for $920,000? (Do not round your intermediate calculations. Round your answer to 2 decimal places. Omit the "%" sign in your response.)

Return on Investment %

b. What is an approximate annualized rate of return on your investment? (Do not round your intermediate calculations. Round your answer to 3 decimal places. Omit the "%" sign in your response.)

Annualized Rate of Return %