What is the yield to maturity on this investment

Reference no: EM132182369

Question - You purchased a house in Victoria for $800,000 which you plan to rent out for $2500/month. You figure the structure on the property has an economic life of 25 years, at which point you figure you will be able to sell just the land for $2.5 million.

a. What is the yield to maturity on this investment?

b. Instead of holding the house for the full 25 years you sell five years later. What was your rate of return?

c. If you expect the average inflation rate into the future to be 2% per year, what is your expected real return for (a) and (b)?

Reference no: EM132182369

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