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Paul's mom, Gina, owns her home outright, without a mortgage. It is currently worth $100,000. If she could get five percent interest by investing her money in a secure government bond, what is the implicit
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Paul's mom, Gina, owns her home outright, without a mortgage. It is currently worth $100,000. If she could get five percent interest by investing her money in a secure government bond, what is the implicit annual interest cost of her home?

User Mayur Agarwal
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1 Answer

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Use the formula i = p*r*t.

Here, p = $100000, r = 0.05 and t = 1 (year)

The interest would be i = $100000*0.05*1 = $5000 per year.
User Tony Baby
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