Case 2 Victor and Maria Consider Selling Maria’s Mother’s Home Victor and Maria Hernandez are thinking about...

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Finance

Case 2
Victor and Maria Consider Selling Maria’s Mother’s Home
Victor and Maria Hernandez are thinking about selling hermother’s home, which she recently inherited, and use the proceedsto enhance their investments for retirement. Its price declinedabout $30,000 in recent years to today’s value of $170,000. Thehome is fully paid for.
If the rent is $1000 a month, what is the rentalyield?
If they sold the home, should they invest the proceeds into anyalternative investments, such as gold?

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Value of the home in todays term 170000 Rent per month 1000 Rent for a year 1000 12 12000 Rental yield is calculated by dividing the total annual rent by the value of the property today Rental yield Annual rent Home value Rental yield 12000 See Answer

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Case 2Victor and Maria Consider Selling Maria’s Mother’s HomeVictor and Maria Hernandez are thinking about selling hermother’s home, which she recently inherited, and use the proceedsto enhance their investments for retirement. Its price declinedabout $30,000 in recent years to today’s value of $170,000. Thehome is fully paid for.If the rent is $1000 a month, what is the rentalyield?If they sold the home, should they invest the proceeds into anyalternative investments, such as gold?