Question

Helen bought a four-unit apartment building for $561,000. The property lost value at a rate of 4.1% per year. Helen rented out each unit for $530 per month, and paid $11,200 per year in upkeep costs. After eight years, she sold the building. To the nearest hundred dollars, what was Helen’s total profit or loss, assuming that she rented out each of her units continually? a. $70,100 loss b. $45,700 loss c. $326,600 profit d. $43,900 profit

the answer is b

Answer 1

The correct answer is B

Explanation:

$45,700 loss

Answer 2

Option B.

Explanation:

Helen bought a four-unit apartment building for $561,000. The property lost value at a rate of 4.1% per year.

`A=a(1-r)^t`

where, a is initial value, r is decreasing rate and t is time in years.

The value of building after 8 years is

`Value=561000(1-0.041)^8\approx 401339`

Diminishing value = Initial value - Value after 8 years

= 561,000 - 401,339

= 159,661

Helen rented out each unit for $530 per month, and paid $11,200 per year in upkeep costs.

Total rent of 4 units for 8 years =
`530* 4* 12* 8=203520`

Total upkeep cost for 8 years =
`11200* 8=89600`

Total earning = Total rent of 4 units for 8 years - Total upkeep cost for 8 years

= 203520 - 89600

= 113920

Profit = Total earning - Diminishing value

= 113920 - 159661

= -45,741

Round the answer to the nearest hundred dollars.

Profit = -45,700

Negative sign represent the loss. It means Helen’s total loss is $45,700.

Therefore, the correct option is B.