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Assume that you can purchase a 3-bedroom rental townhome for $275,000 in Cache Valley, Utah....

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Finance

Assume that you can purchase a 3-bedroom rental townhome for $275,000 in Cache Valley, Utah. The down payment required is 10%. You finance the remaining balance with a 2.75% 30-year fixed term loan. You estimate that your annual property taxes will be $1,700 and annual homeowners insurance expense to be $700. You plan on charging $1,350 per month in rent for 15 years and then selling the property for an estimated $375,000. The appropriate inflation-adjusted discount rate is 2.5% per annum. What is the annualized IRR of this rental investment? [Enter the final answer in as a percent not a decimal (e.g. 5.55% = 5.55)]

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