Real Estate Math
A Rhode Island property rents for $1,800/month. The landlord wants a 12% annual return on their $180,000 investment. Is the current rent sufficient?
A$21,600✓ Correct
BNo, because $1,800 x 12 = $21,600, but $180,000 x 12% = $21,600, so it exactly meets the target
CNo, because the investor needs $22,000 per year
DYes, because any positive return is acceptable
Explanation
$1,800 x 12 = $21,600. Required return: $180,000 x 0.12 = $21,600. The current rent exactly meets the 12% return requirement.
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