You are considering buying a home for $400,000.00. The current interest rate on a 30 year mortgage is 7.5%. You plan to rent the home for $2500.00 per month for the next 10 years at which time you will sell the home. You are required to put 20% down. You anticipate the home will increase in value at 2.5% per year.

1.How much is your down payment?

2.How much will the home be worth in 10 years?

3.How much interest will you pay over the course of the ten years?

4.How much do you owe at the end of 10 years?

5.If you require a 6% rate of return, what is the Net Present Value of this investment?