Final answer:
The management fee is calculated by applying 7% to the first $200,000 of the gross collected rent, and 8% to any amount exceeding $200,000. By adding the fees from both portions of the collected rent together, the total management fee comes to $15,800.
Step-by-step explanation:
A student is seeking to calculate the management fee based on a tiered percentage fee structure of collected rents. To calculate this fee, we break down the total annual gross collected rent into portions as per the agreement terms, and then apply the corresponding percentage fees to those portions.
Firstly, we calculate the fee for the initial $200,000 of rent at 7%, which would be $200,000 * 0.07 = $14,000.
Secondly, we calculate the fee on the amount that exceeds $200,000, which is $22,500 ($222,500 - $200,000). The fee on this excess amount at 8% is $22,500 * 0.08 = $1,800.
Adding both fees together gives us the total management fee: $14,000 + $1,800 = $15,800. Therefore, the correct answer to the student's question is A. $15,800.