Gary Buys a House for $200,000 Using $10,000 of His

question 13

Multiple Choice

Gary buys a house for $200,000 using $10,000 of his own money and gets a mortgage for the remaining $190,000.If the value of the house increases 7%,what will be the percentage increase in Gary's investment?

• A) 25%
• B) 7%
• C) 14%
• D) 70%
• E) 140%

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Definitions:

Asset Turnover Ratio

A financial metric that measures the efficiency of a company's use of its assets to generate sales revenue, calculated by dividing sales revenue by the average total assets.

Operating Lease

Operating lease is a contract that allows for the use of an asset but does not convey rights of ownership of the asset.

Capital Lease

A leasing arrangement in which the lessee records the leased asset as if it was a purchase, reflecting it on their balance sheet as an asset and a corresponding liability.

Lease Inception

The point in time at which a lease agreement is initiated or executed between the lessor and the lessee.