00:01
Hello students, we are given a question here.
00:02
Hillary buys a home for $1 ,000.
00:05
It puts down the 20 percentage with a 4 % mod phase.
00:10
Okay? she sells it after one year when the house has declined in value by 5%.
00:17
What has been the rate of return on her investment for the year? since we are supposed to know that here, his initial investment is nothing but the 20 % down payment.
00:28
Okay so we can say that here the down payment will be equal to down payment will be obviously 20 percentage of one lakh dollar okay students so what we can state here it will be equal to obviously 20 ,000 dollar so now it is nothing but it is considered as the initial investment also known as initial investment okay students now as we are supposed to know this that it means he borrowed 80 percentage of the purchase price from the bank or any institution financial institution which he had to he would have to repaid after one year with four percentage interest so basically we can say that here hillary so hillary borrowed students 80 percentage 80 percentage it means 80 thousand dollar of the purchase price of the purchase price and which we which he would have to pay he would he would be sorry you can say that he would have to repay after one year after one year with four percentage interest okay students so what we can state here that the sales proceed after one year sales proceed after one year so it should be equal to obviously one lakh dollar times one minus five percentage so as we are supposed to know that here it should be like why we deducted this five percentage because we are given here that there is a declining of a five percentage okay so we can say that here it should be like a one lack dollar times 1 minus 5 % is 0 .05 so it should be 0 .95.
02:55
Okay students so we can get here that it should be equal to $95 ,000 it is the sales proceed after one year now we are supposed to know that here the loan repayment loan repayment is it is nothing but equal to $80 ,000 and the interest payment will be interest payment students for after one year it should be equal to 80 ,000 dollars times four percentage so what we can state here it should be equal to thirty two hundred dollar sorry it can be written as thirty two hundred dollar now we are supposed to know that here interest payment is nothing but equal to thirty hundred thirty hundred dollar it means total repayment after one year should be total repayment will be the initial investment okay plus this it means the loan repayment or can be said as this amount which we which larry has borrowed plus interest it means 80 ,000 plus 3200 dollars so we will get it as 83 ,200 dollar okay now we are supposed to know that here the cash left after repayment cash left after repayment students after repayment it would be equal to see the value of the house after one year is was will be sorry $95 ,000 so $95 ,000 minus here it is is $83 ,000 so $200 so we can just say that here it should be equal to $11 ,800.
04:48
So now as we are supposed to know, the rate of return, what we are asked? rate offer return...