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The Petersik family is considering purchasing a second home to use for short term rentals near the beach. If it purchases the house they
The Petersik family is considering purchasing a second home to use for short term rentals near the beach. If it purchases the house they will place a down payment of $63,000 on the house. They estimate they will get an annual net rental profit of $10,500 after th mortgage and expenses are paid. After 18 years, they plan to pass the rental home along to their children, so assume the home has negligible salvage value. What would be the ERR if the Petersik family decides to invest in a rental home, assuming they keep the h for 18 years? Assume their MARR is 10%. Click here to access the TVM Factor Table calculator. % Carry all interim calculations to 5 decimal places and then round your final answer to 1 decimal place. The tolerance is 0.2. Should the Petersik family invest in the rental home?
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