exercise:08ce3e949f

You are given the following information about the purchase of a home:

• The home was purchased on Jan 1 2010 for $300,000
• The buyer used a 10-year mortgage to purchase the home with a down payment of $100,000
• The nominal interest rate for the mortgage is 4%, payable at the end of every month
• The buyer sold the home at the end of 2014 for $440,000
• If the buyer hadn't purchased the home, he would have rented a three bedroom apartment. The monthly rent for a three bedroom apartment, payable at the beginning of the month, was $1,300 on Jan 1 2010 and $1,800 on Jan 1 2015
• The rent on the apartment was adjusted at the start of each year and grew at a constant annual rate

Using only the information above (ignore all other expenses), approximate the effective annual rate of return for this real estate investment.

• 15.26%
• 18.26%
• 20.26%
• 22.26%
• 24.26%