You own a house that you rent for $1,100 a month. The maintenance expenses on the house average $200 a month. The house cost $219,000 when you purchased it 4 years ago. A recent appraisal on the house valued it at $239,000. If you sell the house you will incur $14,000 in real estate fees. The annual property taxes are $4,000. You are deciding whether to sell the house or convert it for your own use as a professional office. What value should you place on this house when analyzing the option of using it as a professional office

Respuesta :

Answer:

$225,000

Explanation:

The computation is shown below:

Data provided in the question

Monthly rent = $1,100

Purchase price of the house = $219,000

Appraisal value of the house = $239,000

Real estate fees = $14,000

Annual property taxes = $4,000

Based on the above information, the opportunity cost is

= Appraisal value of the house - real estates fees

= $239,000 - $14,000

= $225,000