Given the following information:

5 yr loan of $200 000 for a $400 000 bike shop. ($200 000 is from own investment)

60 monthly repayments needed with an amount of $3800

An annual feel of $200

The loan will be fully repaid 5 years.

The expenses of the bike shop are:

$12 000 rent at end of each quarter

$10 000 labor costs paid at the end of each month

$15 000 maintenance costs paid at the end of each half year

The predicted revenue is :

$24 000 per month

Revenue is expected to rise by 24 000(1+1.6%)

The revenue will rise each year so first year is 24 000(1+1.6%) second year is 24 000(1+1.6%)^2 and so on .

Calculate the effective yearly return over the 5 year period if the following occurs:

In July 2023 there is no revenue.

January 2024 the case loses 50% revenue. '

Thank you for your efforts.

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