You are considering buying a foreclosed home as an investment, and expect to hold it for one year before selling it. You require a 25% rate of return on your investment. You are borrowing $110,000 as an interest only loan to make the purchase.

Your acquisition costs will be $18,500, your holding period costs will be $73,000 ($6083.33 monthly) and your expected sales costs will be $7500. What must you sell the home for to earn 25%?

Multiple Choice

• $214,338

• $231,447

• $195,064

• $223,167