Question

A tenant rented a store to use as a real estate school at a base rent of $1,500 a month. Additionally, the tenant agreed to pay 3% of gross annual sales over $200,000. What were the gross sales if the total rent paid for the year was $30,000?1. $400,0002. $150,0003. $600,0004. $750,000

Answer 1

Answer:

3. $600,000

Step-by-step explanation:

We have been given that a tenant rented a store to use as a real estate school at a base rent of $1,500 a month. Additionally, the tenant agreed to pay 3% of gross annual sales over $200,000.

Let us find base annual rent.

$\text{Base annual rent}=\ 1500\times 12\\\\ \text{Base annual rent}=\ 18,000$

Let us find the amount of rent paid as 3% of gross annual sales.

$\ 30,000-\ 18,000=\ 12,000$

Let us find amount of sales over $200,000 by dividing $12000 by 3% or 0.03.

$\frac{\ 12,000}{0.03}=\ 400,000$

Total sales would be $400,000 plus $200,000.

$\text{Total sales}=\ 400,000+\ 200,000\\\\ \text{Total sales}=\ 600,000$

Therefore, the total sales for that year was $600,000 and 3rd option is the correct choice.