Billy is considering the purchase of a rental house. The house costs $240,000 and it will generate annual revenues of $15,000 and annual expenses of $3,000. Nevertheless, Billy will need to borrow $240,000 at an interest rate of 7% per year in case he decides to make this investment. Should Billy purchase this house?
A) No, he will lose money.
B) Yes, his profits will be zero.
C) No, his profits will be positive but close to zero.
D) Yes, he will profit from this investment.
A
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Which of the following is the most likely result of financial intermediaries?
A) increased funds available to borrowers B) higher transaction costs C) higher information costs D) lower information cost but higher transaction costs
A defendant believes there is an 80 percent chance that the plaintiff will win $1,000,000 and a 20 percent chance that the plaintiff will lose and be awarded nothing (zero). The plaintiff believes that there is a 90 percent chance that they will win $1,000,000 and a 10 percent chance that they will be awarded nothing (zero). The plaintiff's litigation cost is $500,000 and the defendant's
litigation cost is $400,000. The defendant would be willing to pay any amount up to ________ to settle. $1,000,000 B) $1,200,000 C) $900,000 D) $800,000
What particularly important role do courts play in a market economy?
Explain why the Fisher equation is not highly accurate at high rates of inflation. Use an example.
What will be an ideal response?