On January 1, Pete Rowe bought a ski chalet for $49,500. Pete is renting the...
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On January 1, Pete Rowe bought a ski chalet for $49,500. Pete is renting the chalet for $52 per night. He estimates he can rent the chalet for 190 nights. Petes mortgage for principal and interest is $445 per month. Real estate tax on the chalet is $470 per year. Pete estimates that his heating bill will run $60 per month. He expects his monthly electrical bill to be $20 per month. He pays $12 per month for cable television. a. What is Petes return on the initial investment for this year? (Round your answer to the nearest tenth percent.)
b. Assume rentals drop by 15% and monthly bills for heat and electricity drop by 15% each month. What would be Petes return on initial investment? (Round your answer to the nearest tenth percent.)
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