Question

a property has a net operating income of $33,000 per year. the operating expense ratio is 28% calculate the effective gross income.

Answer 1

To find the effective gross income with a net operating income of $33,000 and an operating expense ratio of 28%, divide the net operating income by 0.72. The effective gross income is $45,833.33 per year.

Step-by-step explanation:

The question involves calculating the effective gross income for a property with a specified net operating income (NOI) and an operating expense ratio. Given that the operating expense ratio is 28%, we can deduce that the net operating income represents 72% (100% - 28%) of the effective gross income. Therefore, to calculate the effective gross income, we would divide the net operating income by 0.72.

Here is the formula and calculation:

Effective Gross Income = Net Operating Income ÷ (1 - Operating Expense Ratio)

Using the numbers provided:

Effective Gross Income = $33,000 ÷ 0.72

Effective Gross Income = $45,833.33 (rounded to the nearest cent)

Thus, the property's effective gross income is $45,833.33 per year.