Property Management
In Wyoming, a commercial tenant's gross sales are $1,200,000. Under a percentage lease with a natural breakpoint and 6% rent over the breakpoint, if the minimum rent is $60,000/year, what is the additional percentage rent?
A$0 because natural breakpoint = minimum rent / percentage rate = $60,000/0.06 = $1,000,000
BThere is additional rent of $72,000 since 6% of all sales
CThere is additional rent of $12,000 since sales exceed the breakpoint by $200,000✓ Correct
DThere is no percentage rent since the tenant pays only minimum rent
Explanation
Natural breakpoint = Minimum rent / Percentage rate = $60,000 / 0.06 = $1,000,000. Sales exceed breakpoint by $1,200,000 - $1,000,000 = $200,000. Additional percentage rent = $200,000 x 6% = $12,000. Total rent = $60,000 + $12,000 = $72,000.
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