Given the following information, calculate the net operating income assuming below-line treatment of capital expenditures: property: 4 office units, contract rents per unit: $2,500 per month; vacancy and collection losses: 15%; operating expenses: $42,000; capital expenditures: 10%.

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Business

Brycen

6 May, 19:52

Given the following information, calculate the net operating income assuming below-line treatment of capital expenditures: property: 4 office units, contract rents per unit: $2,500 per month; vacancy and collection losses: 15%; operating expenses: $42,000; capital expenditures: 10%.

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Louis Sawyer · Answer 1

Net operating income is $60,000

Explanation:

Numbers of Property = 4 units

Operating Expenses = $42,00)

Contract rents = $2500 / month

Vacancy and collection losses = 15%

Property Gross Rent = Number of Units x Contract rent per unit x No, of Months = 4 units x $2500 x 12 months = $120,000

Property Net Rent = Property Gross Rent - Vacancy and collection losses = $120,000 - ($120,000 x 15%) = $120,000 - $18,000 = $102,000

Property operating Income = Property Net Rent - Operating Expenses = 102,000 - 42,000 = $60,000