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On January 1, Pete Rowe bought a ski chalet for $57,500. Pete is renting the chalet for $68 per night. He estimates he can rent the chalet for 180...
On January 1, Pete Rowe bought a ski chalet for $57,500. Pete is renting the chalet for $68 per night. He estimates he can rent the chalet for 180 nights. Pete's mortgage for principal and interest is $461 per month. Real estate tax on the chalet is $630 per year. Pete estimates that his heating bill will run $70 per month. He expects his monthly electrical bill to be $15 per month. He pays $11 per month for cable television.
a. What is Pete's return on the initial investment for this year? (Round your answer to the nearest tenth percent.)
Pete's return %
b. Assume rentals drop by 25% and monthly bills for heat and electricity drop by 15% each month. What would be Pete's return on initial investment? (Round your answer to the nearest tenth percent.)
Pete's return %
