Respuesta :
Answer:
$4,250
Explanation:
Current return = $102,000 - $85,000 = $17,500
Current rate of return = $17,500/$85,000 = 0.2, or 20%
Additional required rate of return = 25% - 20% = 5%
Dollar amount of income = 5% * $85,000 = $4,250
Therefore, Barbra needs $4,250 to reach her objective.
Check:
Total return = $17,500 + $4,250 = $21,250
Total required rate of return = $21,250/$85,000 = 0.25, or 25%.
Answer:
The multiple choices are:
$4,250
$5,250
$3,750
$4,750
The correct answer is $4,250,the first option
Explanation:
The point is that Barbra expect the piece of real estate to appreciate in value by 25% which gives a value of $85,000*125%=$106,250
However,the present worth is now $102,000,hence the increase beyond the $102,000 is the income receivable from the real estate in form of rental income,which is given by $4,250($106,250-$102,000)
The first option is the correct answer
