Comparing Leverage in Housing Investments
Investor A and Investor B both purchase identical houses for $300,000. Investor A makes a down payment of $30,000, borrowing the rest. Investor B makes a down payment of $60,000, borrowing the rest. After one year, the value of both houses increases by 15%. Calculate the percentage return on the initial cash investment for both investors and briefly explain why their returns are different.
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An individual purchases a house for $500,000, making a 20% down payment and taking out a loan for the remainder. One year later, the value of the house increases by 10%. What is the percentage return on the individual's initial cash investment (their down payment)?
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An investor is considering three different financing options to purchase a $500,000 property. In all scenarios, the property's value increases by $50,000 after one year. Match each financing option with the resulting percentage return on the initial cash investment (equity).
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