An investor purchased a commercial building for $1,200,000.
The gross income form the building was $230,000 the first year.
The expenses for the building were $110,000.
What is the rate of return the investor receives ?
Please take your time. The answer is posted below the wildlife photo (which is royalty free, as they all are).
A. .10 or 10%
We need to find the net income from the building by subtracting the expenses from the gross income.
$230,000 gross income minus $110,000 leaves a net income of $120,000.
Divide the cost of the building, $1,200,000 into $120,000, to find that the rate of return is .10 or 10%.