A lease calls for a minimum rent of $2800 per month plus 4% of annual gross sales in excess of $500,000. What is the annual rent if the annual gross sales were $725,500?

The annual rent is $42,620

Explanation:

The computation of annual rent is shown below:

= Annual rent + (rate * gross sales)

where,

The annual rent is

= Monthly rent * total number of months in a year

= $2,800 * 12

= $33,600

The rate is 4%

The excess gross sales is computed by

= Annual gross sales - gross sales

= $725,500 - $500,000

= $225,500

Now put these values to the above formula

So, the answer would be equal to

= $33,600 + (4% * $225,500)

= $33,600 + $9,020

= $42,620

Hence, the annual rent is $42,620