The interest on the loan and your initial investment

Assignment Help Financial Management

Reference no: EM131890347

You want to purchase a $150,000 house with a 10% down payment and the remainder on a one-year, 5% loan. In one year, you sell the house for $162,000 and pay off the loan and its accrued interest. You are in the 25% marginal tax bracket.

Your net return (rounded to two decimal places as a percentage) on the investment is ____________ %

Feedback: From the sale price, you must subtract your loan amount, the interest on the loan, and your initial investment (equity); but also don't forget to add back your tax shield amount on the mortgage interest. Take this amount divided by your initial equity investment.

Reference no: EM131890347

Questions Cloud

What is the cost of preferred equity : what is the cost of preferred equity? Calculate as an EAR, not an APR.

What is the frequency of the albinism gene : What is the frequency of the albinism gene in the United States and World Wide? How many new cases of Albinism are reported each year?

Compute the cash flows for each year : Compute the cash flows for each year. Discuss whether or not this project should be pursued.

Identify the pathophysiology of the associated alterations : Identify the pathophysiology of the associated alterations, including the normal and altered cellular function. Consider both intra- and extra-cellular changes

The interest on the loan and your initial investment : From the sale price, you must subtract your loan amount, the interest on the loan, and your initial investment (equity);

Colonial flagellate hypothesis of metazoan origin : Explain the colonial flagellate hypothesis of metazoan origin and why it is currently favored.

What did you like about the podcast : Requirements: At least one full (but no more than two)double-spaced page of text, typed, 12-point Times or Times New Roman font, 1-inch margins.

How a meeting agenda could be used to build consensus : Discuss problem-solving realities and the roles of an agenda and procedures in mitigating them - Explain how a meeting agenda could be used to build consensus

What is the expected rate of return on market portfolio : What is the expected rate of return on the market portfolio? What would be the expected rate of return on a stock with ß = 0?

User Account

All Pages