Doris Wade purchased a condominium for $50,000 in 1987. Her down payment was $20,000. She financed the

Question:

Doris Wade purchased a condominium for $50,000 in 1987. Her down payment was $20,000. She financed the remaining amount as a $30,000, 30-year mortgage at 7%, compounded monthly. Her monthly payments are $200. It is now 2007 (20 years later) and Doris has sold the condominium for $100,000, immediately after making her 240th payment on the unit. Her effective annual on this investment is closest to which answer below?
(a) 3.6%
(b) 8.5%
(c) 5.3%
(d) 1.5%
Internal Rate of Return
Internal Rate of Return of IRR is a capital budgeting tool that is used to assess the viability of an investment opportunity. IRR is the true rate of return that a project is capable of generating. It is a metric that tells you about the investment...