prob022 - Problem 22 (Past exam question: 18 minutes)...

Info iconThis preview shows pages 1–2. Sign up to view the full content.

View Full Document Right Arrow Icon
Problem 22 (Past exam question: 18 minutes) (Text: Chs. 4-6) You have just been to your physician, Dr. Do Good, for your annual physical. During your visit, he told you about his latest investment. On April 1, 2008, he purchased an old Victorian home, at what he is sure was the bottom of the real estate market. He paid $300,000 for the home and figures 50% is attributable to the value of the land and the other 50% to the building. After putting a first mortgage of $200,000 on the property at 10% and paying cash for the remainder, he hired the best architect in the city to renovate the house as a triplex. The renovations began April 1 and were completed by October 31. The first tenant moved in on November 1. The renovations were expensive and as he could not persuade the bank to take a second mortgage on the property, he placed a 10%, $150,000 mortgage [representing the full cost of the renovations] on his principal residence on May 1, 2008 in order to finance the renovations. Dr. Do Good is delighted with his investment:
Background image of page 1

Info iconThis preview has intentionally blurred sections. Sign up to view the full version.

View Full DocumentRight Arrow Icon
Image of page 2
This is the end of the preview. Sign up to access the rest of the document.

This note was uploaded on 11/19/2010 for the course ACC 742 taught by Professor Sydor during the Spring '10 term at Ryerson.

Page1 / 3

prob022 - Problem 22 (Past exam question: 18 minutes)...

This preview shows document pages 1 - 2. Sign up to view the full document.

View Full Document Right Arrow Icon
Ask a homework question - tutors are online