A property has the following: 100 studio units renting for $900 / month 120 one-bedroom units renting for $1,200 / month 125 two-bedroom units renting for $1,500 / month Vacancy and uncollectible rent losses amount to 7% of potential gross rent Parking income amounts to $2,500 / month What is the annual Effective Gross Income

The question is related to the calculation of Annual Effective Gross Income from a property. The…

Answered: A property has the following:…

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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Barbara Thompson is considering the purchase of a piece of business rental property containing stores and offices at a cost of $350,000. Barbara estimates that annual receipts from rentals will be $55,000 and that annual disbursement. other than income taxes will be about $18,000. The property is expected to appreciate at the annual rate of 5%. Barbara expects to retain the property for 20 years once it is acquired. Then it will be depreciated on the basis of the 39-year real-property class (MACRS), assuming that the property would be placed in service on January 1.Barbara's marginal tax rate is 30%, and her MARR is 10%. What would be the minimum annual total of rental receipts that would make the investment break-even'?
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A property has the following:
	100 studio units renting for $900 / month
	120 one-bedroom units renting for $1,200 / month
	125 two-bedroom units renting for $1,500 / month
Vacancy and uncollectible rent losses amount to 7% of potential gross rent
Parking income amounts to $2,500 / month

What is the annual Effective Gross Income