Question

Charles Martinez bought a house for $174,995 and turned it into a duplex at a cost of $13,500 for construction and alterations. He then rented each half of the duplex for $600 a month for three years. During that period, he spent $4,400 on property taxes, $2,317 on insurance, $68 on maintenance and repairs, and $6,960 in court costs. At the end of the three years, he sold the house for $217,500. What was his net profit on the house?

a. $20,350
b. $21,825
c. $24,350
d. $25,825

Answer 1

To calculate Charles Martinez's net profit, subtract his expenses from the sale price of the house. His net profit is $203,755.

Step-by-step explanation:

To calculate Charles Martinez's net profit on the house, we need to subtract all the expenses he incurred from the rental income and the sale price of the house.

First, let's calculate the total rental income for three years. Each half of the duplex was rented for $600 a month, so the total rental income is $600 x 2 = $1200 per month. Multiply this by 12 to get the annual rental income: $1200 x 12 = $14,400. Multiply this by 3 to get the total rental income for three years: $14,400 x 3 = $43,200.

Next, add up all the expenses: $4,400 + $2,317 + $68 + $6,960 = $13,745.

Finally, calculate the net profit by subtracting the expenses from the sale price of the house: $217,500 - $13,745 = $203,755.

Therefore, Charles Martinez's net profit on the house was $203,755.