Suppose You Own a House That You Are Renting Out

question 5

Multiple Choice

Suppose you own a house that you are renting out to a group of college students for the 10 month academic year.You are charging $1000 per month in rent.You will collect the first rent payment today and then on the 1^st of the month each month thereafter.What is the value of this investment opportunity to you today if you could reinvest your income at a rate of 6%?

• A)$9,677.77
• B)$9,730.41
• C)$9,779.06
• D)$11,677.03

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Definitions:

Real Output

The quantity of goods and services produced in an economy adjusted for inflation, representing the actual productivity.

Price Level

A measure of the average prices of goods and services in an economy at a specific point in time.

Aggregate Demand Curve

A graphical representation showing the relationship between the total quantity of goods and services demanded and the overall price level.

Vertical Axis

In a graph or chart, the y-axis, which is typically used to measure the dependent variable or the value being investigated.