# Everest

Jamie is thinking about investing in some residential income producing property that she can purchase for \$200,000. Jamie can either pay cash for the full amount of the property or put up %50,000 of her own money and borrow the remaining %150,000 at 8% interest. The property is expected to generate \$30,000 per year after all expenses but before interest and income taxes. Assume that Jamie is in the 28% tax bracket. Calculate her annual profit and return on investment assuming that she (a) pays the full \$200,000 from their own funds or (b) borrows \$150,000 at 8%. Then discuss the effect, if any, of leverage on his rate of return. (hint: earnings before interest and taxes minus interest expenses equals earnings before taxes minus income taxes ( @28%) equals profit after taxes.

1. 👍 0
2. 👎 0
3. 👁 102

## Similar Questions

1. ### investing

. Jamie Thompson is thinking about investing in some residential income-producing property that she can purchase for \$200,000. Jamie can either pay cash for the full amount of the property or put up \$50,000 of her own money and

asked by Anonymous on January 5, 2014
2. ### math

Jamie Thompson is thinking about investing in some residential income-producing property that she can purchase for \$200,000. Jamie can either pay cash for the full amount of the property or put up \$50,000 of her own money and

asked by zeenat on September 24, 2013
3. ### Finance

2. Jamie Thompson is thinking about investing in some residential income-producing property that she can purchase for \$200,000. Jamie can either pay cash for the full amount of the property or put up \$50,000 of her own money and

asked by Marie on November 2, 2014
4. ### Economics

The assessed value of Patty's residential property was \$200,000 in 2004. In 2006, the assessed value increased to \$225,000. The property tax rate in both years was 1.2 percent. Patty earned \$60,000 each year. Determine Patty’s

asked by Kesha on March 16, 2015
5. ### Financial management

ABC Construction and Leasing Company are interested in investing in the residential real estate market due to a relatively low interest rate environment. The Company appointed you to be in charge of the project feasibility study.

asked by Mike on January 1, 2013
6. ### Econ

Taxable income is Question 7 options: total of all income, less deductions and exemptions. A earned income less property income. B all income other than wages and salaries. C wage and salary income only. D all earned income E I

asked by Gibby on July 12, 2018
7. ### Economics

Taxable income is A) total income less deductions and exemptions. B) earned income less property income. C) all income other than wages and salaries. D) wage and salary income only. E) all earned income is it a?

asked by alex on July 22, 2012
8. ### Accounting

During the fiscal period just ended some of the inventory in the warehouse of Jamie Ltd. wasn’t counted. Jamie Ltd. uses a periodic inventory control system. Explain how the following are affected by the error: • Net income

asked by Callie on February 5, 2014
9. ### Math

A residential property is assessed for tax purposes at 40% of its market value. The residential property tax is 3 1/3% of the assessed value and the tax is \$1200. a)What is the assessed value of the property? b) What is the market

asked by Anonymous on October 3, 2012
10. ### Math - Need urgent help!

A residential property is assessed for tax purposes at 40% of its market value. The residential property tax is 3 1/3% of the assessed value and the tax is \$1200. a)What is the assessed value of the property? b) What is the market

asked by Anonymous on October 3, 2012

More Similar Questions