Question 201 • Financial Math - MA2007
Wayne rents 15 apartments on average because three-quarters of 20 is 15. His annual rent is 15 × $495 × 12 = $89,100, so after $26,400 in upkeep, he earns $62,700 per year, or $940,500 over 15 years. After 15 annual decreases of 3.8%, the building is worth about $424,300; that is a loss of about $334,700 compared with its $759,000 purchase price. Combining that loss with the rental income gives a net profit of about $605,800, which rounds to $606,000: choice D, $606,000 profit.
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