A 3-year-old house can be purchased for an excellent price of $100,000. Remodeling costs immediately after purchase are estimated to be $12,000. Taxes will be $3800 per year, utilities will cost $2500 per year, and the house must be repainted every 6 years atacostof$1000. At present, resale houses are selling for $60 per square foot, but this price has been increasing, a trend that is expected to continue, by $1.50 per square foot per year. The 2500-squarefoot house can be continually leased for $12,000 per year from this year until it is sold. A return of 8% per year is expected if the investment is made.

(a) Determine how long the purchaser must own and lease the house to break even and the anticipated selling price at breakeven time.

(b) Use Excel to approximate the breakeven years and estimated selling price.

## Solution:

##
Looking for help with your homework?

Grab a 30% Discount and Get your paper done!

30% OFF

Turnitin Report

Formatting

Title Page

Citation

Place an Order