Question

A 1,500 square foot office space is leased at $12.00 square foot. The space is vacant one month out of the year. Office expenses are $6.50 per square foot and an expense stop is set at $6.00 per square foot. What is the annual net operating income?

Answer 1

$ 7500

Step-by-step explanation:

Calculation of annual net operating income (which is usually calculated for every year as far as the entity carries out its business activities for the year. So, so far you are aware of the amount you spend and the amount you earn monthly, all you’ll have to do is to just multiply by twelve to get your annual totals.)

annual lease income = 1500*12*11/12

=$ 16500

annual expenses = 1500*$ 6

=$ 9000

annual net income = $ 16500-$ 9000

= $ 7500

Answer 2

The annual net operating income is: $7,500.

Step-by-step explanation:

We have:

+ Annual revenue earned from rental fee is only on a 11-month basis as one month out of the year the space is vacant, so annual revenue is calculated as: Areas x price per square foot x 11/12 = 1,500 x 12 x 11/12 = $16,500;

+ Annual expenses stop fee is calculated on a 1-month basis, so it is equal to: stop fee per square foot x square food x 1/12 x area = 6 x 1,500 x 1/12 = $750

+ Annual cost is on 12-month basis, so it is equal to: area x cost per square foot = $9,750

=> Annual net operating income = Annual revenue earned from rental fee + Annual expenses stop fee - Annual cost = 16,500 + 750 - 9,750 = $7,500.