Problem 1. (5 points) You finally found a rental property that looks promising. As you prepare your offer, you need to determine the maximum price that you are willing to pay (breakeven). You anticipate obtaining $12,000 in revenue starting in year 1 through year 7, and you expect annual maintenance and insurance costs to be $3,000. You will need to put on a new roof in year 3 ($7,000). Assuming a hurdle rate of 4.5% (the current rate of your money market account) and a 10-year project evaluation life, determine the breakeven price of the house. Assuming you can negotiate the price to $55,000, determine the NPV, ROR, PVR, BCR, and GROR for this opportunity.

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