Answer:
The net profit of Wayne will be $606,000.
Explanation:
Note: See the attached excel file for the calculation of the annual end of year value of the building.
From the attached excel file, we have:
Value of the building at the end of the year 15 = $424,490.38
From the question, we can have:
Annual revenue from the building = Monthly rent * Number of rooms * Number of months in a year * three-quarters = $495 * 20 * 12 * (3/4) = $89,100
Annual cost of upkeep on the building = $26,400
Total profit from renting out the building = (Annual revenue from the building - Annual cost of upkeep on the building) * Number of years = ($89,100 - $26,400) * 15 = $940,500
Therefore, we have:
Net profit (loss) when Wayne sells the building = Value of the building at the end of the year 15 + Total profit from renting out the building - Cost of the building = $424,490.38 + $940,500 - $759,000 = $605,990.38
Rounding to the nearest hundred dollars as required, we have:
Net profit (loss) when Wayne sells the building = $606,000
Therefore, the net profit of Wayne will be $606,000.
