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You plan to purchase a rented house which you could rent to earn you an annual income of $12,000. The expected annual expenses of the house are $3,000. You plan to sell the house for $145,000 at the end of ten years .a. Draw a cash flow diagram for this investment if you consider 18% to be a suitable interest rateb. Determine how much you could afford to pay for it now.

You plan to purchase a rented house which you could rent to earn you an annual income of $12,000. The expected annual expenses of the house are $3,000. You plan to sell the house for $145,000 at the end of ten years .a. Draw a cash flow diagram for this investment if you consider 18% to be a suitable interest rateb. Determine how much you could afford to pay for it now.

Essentials Of Investments
Essentials Of Investments
11th Edition
ISBN:9781260013924
Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Chapter1: Investments: Background And Issues
Section: Chapter Questions
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You plan to purchase a rented house which you could rent to earn you an annual income of $12,000. The expected annual expenses of the house are $3,000. You plan to sell the house for $145,000 at the end of ten years .a. Draw a cash flow diagram for this investment if you consider 18% to be a suitable interest rateb. Determine how much you could afford to pay for it now.
Transcribed Image Text:You plan to purchase a rented house which you could rent to earn you an annual income of $12,000. The expected annual expenses of the house are $3,000. You plan to sell the house for $145,000 at the end of ten years .a. Draw a cash flow diagram for this investment if you consider 18% to be a suitable interest rateb. Determine how much you could afford to pay for it now.
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