A friend, Ms. Michelle, was renting a house for $1,800 per month, but recently purchased a comparable home for $400,000. Ms. Michelle’s opportunity cost of capital is 0.5% per month and she will have to pay a 5% commission when she sells the house. Assuming that she has to move and sell the house in two years, how much the house appreciate in value for her to be better off than renting (assuming that rent remained $1,800/month for 2 years)?
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