1) Jill buys a house for $900k, lives there for exactly 10 years and sells it. Suppose Jill’s annual cost of ownership is exactly equal to the annual rent she would have paid to live in the same house. Suppose the price of Jill’s house grows 3.4% annually. Compute Jill’s annual IRR from owning net of renting.

2)Jill buys a house for $900k, lives there for exactly 10 years and sells it. Suppose Jill’s annual cost of ownership is exactly equal to the annual rent she would have paid to live in the same house. Suppose the price of Jill’s house grows 3.4% annually. Buying expenses are 5% of purchase price and selling expenses are 8% of sale price. Compute Jill’s annual IRR from owning net of renting.

Answer rating: 100% (QA)

Step 1 Calculate the annual cost of ownership Since the annual cost of ownership is equal to the annual rent well consider it as the annual rent amoun... View the full answer