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Determine the ror on lucindas investment

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Reference no: EM131972142

Lucinda Lacy is Venturing into real estate investments again. Lucinda bought another house with a purchase price of $155,000. She had initial costs of $15,000 down payment and $5,000 closing costs.

Her monthly expenses were $250 for taxes, $450 for mortgage payment, and $1, 800 per month for a firm fixed price remodeling contract.

When she sold the house for $210,000 after owning it for 12 months, she used part of the money to pay off the remaining bank loan at $150,000 and her selling expenses of $4200 plus $1000.

Determine the ROR on Lucinda's investment.

a- Draw the cash flow diagram that represents the actual situation.

b- Draw the "Ball Park" cash flow diagram that does not consider TVM.

c- Write the equations and solve the problem using the "Ball Park" method.

Reference no: EM131972142

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