Wayne is planning to sell the twenty-room apartment building he bought fifteen years ago, for which he paid $759,000. The real estate market in his area has been falling since that time, and the property has decreased in value by 3.8% every year. Wayne rents each of his apartments for $495 per month, and upkeep on the building costs him $26,400 annually. Assuming that Wayne has kept his apartment complex constantly three-quarters full, what will his net profit or loss be when he sells the building, to the nearest hundred dollars?

Question

Mathematics

Kassandra

4 February, 03:45

Wayne is planning to sell the twenty-room apartment building he bought fifteen years ago, for which he paid $759,000. The real estate market in his area has been falling since that time, and the property has decreased in value by 3.8% every year. Wayne rents each of his apartments for $495 per month, and upkeep on the building costs him $26,400 annually. Assuming that Wayne has kept his apartment complex constantly three-quarters full, what will his net profit or loss be when he sells the building, to the nearest hundred dollars?

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Kianna Lang · Answer 1

Wayne's loss:

$759,000 + ($ 26,400 x 15) = $759,000 + 396,000 = $1,155,000

Wayne's profit:

($ 495 x 15 x 12 x 15) + $795,000 x (0.962 ^ 15) = $1,760,990

His net profit:

$ 1,760,990 - $1,155,000 = $605,990 ≈ $606,000