You Bought a House for $250,000 and Incurred Additional Transaction

question 12

Multiple Choice

You bought a house for $250,000 and incurred additional transaction costs of $2,000 at the time of your purchase. You sold the house one year later for $325,000. The selling broker charged a
6% commission, and you incurred other costs associated with the sale, both direct and indirect,
Of $5,000. An alternative investment of similar risk offers a 10% annual return, but has a 60
Basis point transaction cost. What is the NPV of this investment?

• A)$26,680
• B)$22,680
• C)$24,680
• D)$36,942

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Definitions:

Negatively Impact

To have a harmful or adverse effect on something.

Dominant Species

In a community, a species that as a result of its large biomass or abundance exerts a major influence on the distribution of populations of other species.

Common Species

A term referring to species that are frequently encountered within their habitat or geographical area, often well-adapted to living in human-altered environments.

Community

An assemblage of different populations that live together in a defined area and interact with each other.