Assume that you own a lake house. Unfortunately your job will require that you spend the summer on the road and you won’t be able to enjoy it. You decide that you will rent it out for the summer while you are working. The mortgage payment on the lake house is $1000 per month and the upkeep and maintenance if it is occupied is $200 month but zero if it is not rented. What is the minimum rent that you would be willing to receive and why? What information is irrelevant in your decision? Explain.

You'd have to charge at least $1200 a month.

It's irrelevant that you maintenance would be zero if it's not rented.