Ron is purchasing a $600,000 house which can be rented out for $20,000 per year (incurring $8,000 of related expenses). A local realtor expects that the house’s value will appreciate by one-fifth over the next five years. Assuming Ron desires an annual rate of return of at least 5.50%, is the house a good investment?

Answer rating: 100% (QA)

To determine if the house is a good investment we need to calculate the expected return on investmen... View the full answer