Chapter 13 Financial Planning Exercise 13 Investing in residental income producing property Mallory Comer is thinking about investing in some residential income producing property that she can purchase for $170,000. Mallory can either pay cash for the full amount of the property or put up $70,000 of her own money and borrow the remaining $100,000 at 5 percent interest. The property is expected to generate $10,000 per year after all expenses but before interest and income taxes. Assume that Mallory is in the 25 percent tax bracket. (Hint: Earnings before interest & taxes minus interest expenses (fan) equals tamnings before to minus income taxes (0256) equals Profit after taxes.) 1. Calculate her annual profit and return on investment assuming that she pays the full $170,000 from her own funds. Do not round intermediate calculations. Round the profit to the nearest whole dollar and Rot to two decimal places Annual profit Return on Investment b. Calculate her annual profit and return on investment assuming that she borrows $100,000 a 5 percent. Do not round intermediate calculations. Round the profit to the nearest whole dollar and ROI to two decimal places Annual profits Return on Investment 96 c. What was the effect of using leverage on Mallory's rate of return? Select- leverage