Logo
Home Study Material Contact Search
AI Chat FREE
  1. business
  2. finance
  3. jill buys a house for $800k, lives there for exact

Jill buys a house for $800k, lives there for exactly 10 years and sells it. Suppose Jill’s...

60.1K

Verified Solution

Question

Finance

Jill buys a house for $800k, lives there for exactly 10 yearsand sells it.

Suppose Jill’s annual cost of ownership is exactly equal to theannual 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 expensesare 8% of sale price.

Compute Jill’s annual IRR from owning net of renting.

(hint: look at the buy vs rent slides, assume no mortgage.)

Answer & Explanation Solved by verified expert
4.0 Ratings (815 Votes)
Cash flow for owning Purchase Price of house 800k 800000 Buying expenses 5 x purchase price of house 5 x 800000 40000 Initial Cash flow in year 0 Purchase price Buying expenses 800000 40000 840000 Operating cash flow for year 1 to year 10 Annual cost of ownership from year 1 to    See Answer
Get Answers to Unlimited Questions

Join us to gain access to millions of questions and expert answers. Enjoy exclusive benefits tailored just for you!

Membership Benefits:
  • Unlimited Question Access with detailed Answers
  • Zin AI - 3 Million Words
  • 10 Dall-E 3 Images
  • 20 Plot Generations
  • Conversation with Dialogue Memory
  • No Ads, Ever!
  • Access to Our Best AI Platform: Flex AI - Your personal assistant for all your inquiries!
Become a Member

Other questions asked by students

Chemistry
1.2K views

Compounds A and B have the following vapor pressures: 150oF: PA=600mmHg PB=500mmHg 200oF: PA=1000mmHgPB=950mmHg Assume that these compounds form ideal solution,...

Mechanical Engineering
1.2K views

Aluminum fins of triangular profile are attached to a plane wall whose surface temperature is 100°C....

Advance Math
1.2K views

Problem 1: Consider the following Initial Value Problem (IVP) where ? is the dependent variable and...

Basic Math
1.2K views

A. Write the following as whole numbers or decimals, without words.3.2 thousand26 thousand14.5 milliona rate...

Algebra
1.2K views

2 Consider the matrix equation 2 0 4 MT 2 0 2 3 1 2...

Accounting
1.2K views

The general ledger of AXM, Inc., provides the following information relating to purchases...

Accounting
1.2K views

Cash flew forn operationa is net in a...

Accounting
1.2K views

Wexpro, Incorporated, produces several products from processing 1 ton of clypton, a rare mineral. Material...

Accounting
1.2K views

Consider an economy of three-period-lived people in overlapping gener- ations. Each individual is endowed with...

Accounting
1.2K views

During June, Buttrey Corporation incurred $67,000 of direct labor costs and $7,000 of indirect labor...

Accounting
1.2K views

Sales commission is considered to be a product cost True O False

Accounting
1.2K views

The management of a 9,500-room theme hotel in Orlando projected an average occupancy of 80.00%...