I purchased a house and intend to hold the property indefinitely. I plan to rent the house to generate rent income. The first years rent is $15,000, and will grow it at the rate of 10% for 3 years after that. After the initial 4 years, the growth rate in the rent will stabilize at 5%. The maintenance will cost $5,000 a year. The appropriate discount rate is 20%.

a. What is the present value of rent income?

b. What is the present value of the house?

c. What is the present value of maintenance costs?