Question

# Jenny bought a rental property for \$1,000,000 and leased it for 24 months. Rents will be...

Jenny bought a rental property for \$1,000,000 and leased it for 24 months. Rents will be collected at the beginning of each month and the residual value after 24 months will be \$800,000. To earn 24% rate of return per year on this lease, how much rent/month should be charged? Please show your work.

Property purchased price = \$1,000,000

Residual Value after 24 months = \$800,000

Total earning 24% per year = (\$1,000,000 - \$800,000)*(24%) = \$48,000

Return for 24 months = \$48,000*2 = \$96,000

Total Rent should charged for 24 months ; \$200,000 + \$96,000 = \$296,000

Per month Rent = \$296,000/24 = \$12,333

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