A Property Is Purchased for $200,000 with an 80 Percent

question 12

Multiple Choice

A property is purchased for $200,000 with an 80 percent LTV.After five years,the owner's equity is $80,000.What would be the approximate annual expected appreciation rate on home equity (annual EAHE) ?

• A)13.9%
• B)14.9%
• C)20.0%
• D)80.0%
• E)100%

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Definitions:

Purely Competitive

A commercial framework featuring a multitude of buyers and sellers, unimpeded access and withdrawal, and uniform products.

Increasing-Cost Industry

An industry in which production costs rise as the industry's output increases, often due to the input costs and resource limitations.

Increasing-Cost Industry

An industry in which the costs of production increase as the output expands, usually due to factors like shortages of resources or increased prices of inputs.