Suppose you bought a condo for $100,000 financing it with a $20,000 down payment of your own funds and an $80,000 mortgage loan from a bank. Now assume that, instead of (a), you only put down $10,000 and borrowed $90,000 to buy the condo.  Assuming that the market value of your house has risen to $120,000 and ignoring interest and other costs, calculate your rate of return on your asset (ROA) and your  rate of return on equity (ROE).

FINANCIAL ACCOUNTING
10th Edition
ISBN:9781259964947
Author:Libby
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Chapter1: Financial Statements And Business Decisions
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Suppose you bought a condo for $100,000 financing it with a $20,000 down payment of your own funds and an $80,000 mortgage loan from a bank.

Now assume that, instead of (a), you only put down $10,000 and borrowed $90,000 to buy the condo.  Assuming that the market value of your house has risen to $120,000 and ignoring interest and other costs, calculate your rate of return on your asset (ROA) and your  rate of return on equity (ROE).

 

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