Beth bought some residential development property for 200,000 five years ago. She sold the
Beth bought some residential development property for 200,000 five years ago. She sold the
property this year for $1,200,000 and spent $250,000 for infrastructure development in year 5, the
year in which the property was sold. If the inflation rate for the past 5 years has been steady at 5%
annually, compute the after-tax real rate of return on this investment. Assume a capital gain tax of
15%.
