Jack purchases a house for $90,000 and spends $15,000 to renovate it. He holds the house for 35 years and then sells it in middle of a real estate bubble for $400,000. On how much of that amount does he have to pay taxes? Mary purchased a home for $200,000. By living in the home, she saved $18,000 annually because she did not have to pay rent. She had to pay $3000 annually for upkeep of the house. By the end of the first year, the home price had appreciated to $210,000. What was her return for the first year (considering assumed rents)? Josh cans $80,000 a year. He would like to purchase a home and applies for a mortgage from the bank. The bank requires that the debt not exceed 28 percent of his annual income. With the current down payment he is willing to pay, his monthly mortgage payment will be $1, 600. In addition, he will have to pay $4,000 annually and insurance. Will the bank approve his loan? Harry decides to purchase an apartment building as an investment. He pays $6,000,000 for the building. The building has a net income of $150,000, annual depreciation $150,000, annual taxes of $75,000, and annual interest payments of $105,000. a. Calculate the building's cap rate. b. One year later, the price of the building goes up to $7,000,000. Calculate the new cap rate. Genaro purchased a stock for $24 that paid $2.00 at the end of each year in dividends (dividends remained level over time). He sold it four years later for $28 at the time of the last dividend payment. What was his IRR? A stock has an expected rate of return of 9 percent and the risk-free rate is 3 percent. What is the risk premium