Using leverage,what is the ROI on a $100,000 investment purchased with a bank loan and a $20,000 down payment if you have used sweat equity to improve its value by $10,000?

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The investment bought at $100,000 with a $20,000 down payment and a bank loan means the remaining $80,000 was borrowed. If the ROI is calculated solely on the initial investment of $20,000, then the ROI is (($10,000 + $100,000) / $20,000) = 55%. However, since $80,000 was borrowed, the ROI needs to be adjusted. If the loan interest rate is 5%, then the yearly interest cost would be $4,000. Therefore, the adjusted ROI would be ((($10,000 + $100,000) - $4,000) / $20,000) = 53%. Rounding to the nearest 50%, the answer is C) 50%.

Using Leverage,what Is the ROI on a $100,000 Investment Purchased