Question
The Smiths are thinking about buying a rental unit that has the following cash flows. They want to know if this is a good investment.
The Smiths are thinking about buying a rental unit that has the following cash flows. They want to know if this is a good investment. | ||||||
| Cost | 250,000 | |||||
| Monthly Rent (2% annual increase) | 1,600 | |||||
| Annual Expenses (2% inflation) | $1,000 | |||||
| Annual Appreciation | 3% | |||||
| The next best investment returns 10% | 10% | |||||
| They plan on keeping the property for five years then sell it. | 5 | yrs. | ||||
| What is the Value of the house in five years? | < use a future value calculation | |||||
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Financial Accounting and Reporting a Global Perspective
Authors: Michel Lebas, Herve Stolowy, Yuan Ding
4th edition
978-1408066621, 1408066629, 1408076861, 978-1408076866
