Chapter 13 Financial Planning Exercise 9 Investing in residential income-producing property Leah Reyes is thinking about investing in residential income-producing property that she can purchase for $100,000. Leah can either pay cash for the full amount of the property or put up $30,000 of her own money and borrow the remaining $70,000 at 8 percent interest. The property is expected to generate $15,000 per year after all expenses but before interest and income taxes. Assume that Leah is in the 33 percent tax bracket. (Hint: Earnings before interest & taxes minus Interest expenses (if any) equals Earnings before taxes minus Income taxes (@33%) equals Profit after taxes.) a. Calculate her annual profit and return on investment assuming that she pays the full $100,000 from her own funds. Do not round intermediate calculations. Round the profit to the nearest whole dollar and ROI to two decimal places. Annual profit $ Return on Investment % b. Calculate her annual profit and return on investment assuming that she borrows $70,000 at 8 percent. Do not round intermediate calculations. Round the profit to the nearest whole dollar and ROI to two decimal places. Annual profit $ Return on Investment % c. What was the effect of using leverage on Leah's rate of return? -Select