Essentials Of Investments
11th Edition
ISBN: 9781260013924
Author: Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher: Mcgraw-hill Education,
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I purchased a house and intend to hold the property indefinitely. I plan to rent the house to generate rent income. The first year’s rent is $15,000, and will grow it at the rate of 10% for 3 years after that. After the initial 4 years, the growth rate in the rent will stabilize at 5%. The maintenance will cost $5,000 a year. The appropriate discount rate is 20%.
a. What is the
b. What is the present value of the house?
c. What is the present value of maintenance costs?
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