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slamgirl [31]
4 years ago
6

An investor was looking at a sixteen-unit apartment building. Four of the units rented for $600, four for $750, four for $725, a

nd four for $800 per month. The building had monthly expenses of $1200. If the investor wants an 8% rate of return, how much should he pay for the building?
Business
1 answer:
tankabanditka [31]4 years ago
6 0

Answer:

$1,545,000

Explanation:

The formula to compute the cost of the building equal to

Rate of return = (Rental income - expenses) ÷ (cost of building )

where,

Rate of return = 8%

Rental income equals to

= ($600 × 4 units + $750 ×  4 units + $725 × 4 units + $800 × 4 units) ×  12 months

= $138,000

Total expense

= $1,200 ×  12 month

= $14,400

Now the cost of building would be

8% = ($138,000 - $14,400) ÷ (cost of building )

8% = $123,600

So, the cost of building equal to $1,545,000

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Answer:

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3. The perpetual inventory system, inventory transactions are recognized in the inventory and cost of goods sold accounts immediately and not at period-end like the periodic inventory system, which waits until inventory count to recognize transactions.

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