6. You are considering remodeling your kitchen, where the estimated cost is $45,000. Your realtor friend...
6. You are considering remodeling your kitchen, where the estimated cost is $45,000. Your realtor friend has told you that it will immediately increase the value of your house by about 90% of the remodeling cost. Experts say that on average, the value of houses in your area will appreciate by about 5% annually. If your opportunity cost is 3.5%, and you plan to sell the house in 6 years, is it a good investment to remodel the kitchen?
Homework Answers
it is still a very good investment because it will appreciate the value of house by almost 90% that means that the value of house will be almost getting doubled whereas the cost associated with this remodelling is relative lower even after taking into account the opportunity cost.
the relative appreciation in the area is very lower and it would not appreciate much in 6 years even after taking into the opportunity cost added to overall appreciation in the relevant area.
It is a good investment to remodel the kitchen because the primary motive is to sell the house in 6 years that is getting the most out of selling the the house, so even if we discount the value associated with appreciation we will still be making money and it will be a good investment
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6. You are considering remodeling your kitchen, where the
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