36
QuizMultiple Choice

Real Estate Investments

Question 36 • 26-27 Ignite Technical Math-Financial Math - MA2007

Five years ago, William bought a twelve-room apartment complex for $340,000, and he plans to sell it today. The real estate market caused William’s complex to increase in value by 1.8% every year. William charges $525 per month to rent a room, and pays $36,500 in building upkeep every year. If William has kept all of his apartments continually rented out since he bought the building, to the nearest hundred dollars, how much profit will he realize once he sells it?

Answer
A
$195,500
B
$227,200
C
$226,100
D
$245,500

Explanation

William earns $12 × $525 × 12 = $75,600 in rent each year. After $36,500 in upkeep, that leaves $39,100 per year, or $195,500 over five years. The building’s value becomes $340,000 × 1.018⁵ ≈ $371,721, an increase of about $31,721. Adding the rental income after upkeep to the increase in value gives about $227,200, choice B.

AI-written and checked against the verified answer.

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