Lacy is venturing into real estate investments again. Lacy bought another house with a purchase price of $152,500. She had initial costs of $13,500 down payment and $6500 closing costs. Her monthly expenses were $300 for taxes, $400 for mortgage payment, and $1,800 per month for a firm fixed price remodeling contract. When she sold the house for $210,000 after owning it for 12 months she used part of the money to pay off the remaining bank loan at $150,000 and her selling expenses of $4100 plus $1100.
Determine the ROR on Lacy's investment.
1) Draw the cash flow diagram that represents the actual situation.
2) Draw the "Ball Park" Cash flow diagram the does not consider TVM.
3) Write the equations and solve the problem using the"Ball Park" method.
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