Question

Given the following information, calculate the net operating income assuming below-line treatment of capital expenditures? Property: 4 office units, Contract Rents per unit: $2500 per month, Vacancy and collection losses: 15%, Operating Expenses: $42,000, Capital Expenditures: 10%
A. $48,000
B. $60,000
C. $95,000
D. $102,000

Answer 1

Answer:

B. $60,000

Explanation:

4 office units x $ 2,500 per month x 12 months = 120,000

Vanccy and collection losses 15%

120,000 x 15% = 18,000

Then operating expenses for $ 42,000

The capital expenditures aren't considered expenses for the period.

120,000 - 18,000 - 42,000  = 60,000