Consider a buyer who purchased a home in Phoenix that month for $150,000, using $30,000 of her own funds as a down payment and borrowing the remaining $120,000 from a bank via a 30-year mortgage. Two years later, prices in Phoenix rose by 30 percent, and the house was then worth $195,000. Assuming that after making 2 years of payments on the 30-year mortgage, the outstanding mortgage balance was still $118,000. How much equity does the buyer have in her home? What rate of return has she earned on her initial $30,000 investment ?