Question
On January 1, Pete Rowe bought a ski chalet for $49,000. Pete is renting the chalet for $51 per night. He estimates he can rent
On January 1, Pete Rowe bought a ski chalet for $49,000. Pete is renting the chalet for $51 per night. He estimates he can rent the chalet for 200 nights. Petes mortgage for principal and interest is $444 per month. Real estate tax on the chalet is $460 per year. Pete estimates that his heating bill will run $70 per month. He expects his monthly electrical bill to be $15 per month. He pays $11 per month for cable television.
a. What is Petes return on the initial investment for this year? (Round your answer to the nearest tenth percent.)
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b. Assume rentals drop by 20% and monthly bills for heat and electricity drop by 10% each month. What would be Petes return on initial investment? (Round your answer to the nearest tenth percent.)
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