The Whitmans decided to offer their beach house in Miami for rent.If they expect a monthly rent of $5,000 and the cost of building the house is $1 million,their expected rate of return should be _____

Question

Quizplus · Accepted Answer

The expected rate of return is calculated by dividing the annual income by the cost of the investment. Here, the annual income from rent is $5,000 * 12 = $60,000. The cost of the house is $1 million. Therefore, the expected rate of return is ($60,000 / $1,000,000) * 100 = 6 percent annually.

The Whitmans Decided to Offer Their Beach House in Miami