Question

The landlord of an office building charges tenants $150 per hour for extra HVAC usage after hours. During the last three years, usage has averaged approximately 500 hours per year. Assume that usage will increase by 10% over the previous average. In addition assume a 5% credit loss on the total HVAC income, what is the approximate HVAC revenue the landlord will realize?

Answer 1

$78,375

Step-by-step explanation:

Actual HVAC usage = 500 + (500 × 10%) = 500 + 50 = 550

Total HVAC income before credit loss = 550 × $150 = $82,500

Total HVAC income before credit loss = $82,500 - ($82,500 × 5%) = $82,500 - $4,125 = $78,375

Therefore, the approximate heating, ventilation, and air conditioning (HVAC) revenue the landlord will realize is $78,375.