Question

An apartment building has $105,000 net income and sold for $1,450,000. What was the rate of return?

a. 7.2%
b. 13.8%
c. 8.3%
d. 9.1%

Answer 1

The rate of return on the apartment building is calculated by dividing the net income by the sale price and multiplying by 100%. Therefore, it is approximately 7.2%.

Step-by-step explanation:

To calculate the rate of return on the apartment building, we need to divide the net income by the sale price and then convert it to a percentage. The formula for the rate of return is:

Rate of Return = (Net Income / Sale Price) x 100%

Applying the given values:

Rate of Return = ($105,000 / $1,450,000) x 100%

Rate of Return = 0.0724 or 7.24%

The closest option to our result is a. 7.2% which would be the correct answer.