You are interested in investing in a rental property that cost $$125,000.$ Conflicted on if you should invest in the property or invest in the stock market, you decide to run a Net Present Value calculation to determine if the rental property is a good investment based upon the details below.

Original Investment: $$125,000$

Projected Monthly Cash Flow: $($Month $1$ through $12)$: $$7,000$

Projected Monthly Cash Flow: $($Month $13$ through $36)$: $$9,000$

Interest Rate: $6\%$

Task:

$1.$ In excel, prepare a Net Present Value for your rental property

$2.$ What is the rate of return on your investment in the rental property $($see formula below$)?$

$3.$ Is it better to invest in the rental property or invest in the stock market?

Rate of Return Formula:

Vf $=$ Ending Value of Investment $($total value of all future cash flows$)$

Vi $=$ Initial Investment

Discount Rate Formula: $(1+$interest rate$)^(1/12)-1)$