Ignoring income taxes, what is the estimated annual net operating income increase/decrease?

Question

Quizplus · Accepted Answer

Annual net operating income increase = (New rental income - Current rental income) - (New operating expenses - Current operating expenses)
= [(80 units x $150 increase x 12 months) - (80 units x $50 price reduction x 12 months)] - [(80 units x $60 increase x 12 months) - (80 units x $40 decrease x 12 months)]
= ($144,000 - $48,000) - ($76,800 - $51,200)
= $96,000 - $25,600
= $70,400
Therefore, the estimated annual net operating income increase is $70,400, which is closest to option B, $12,875 (rounded to the nearest dollar).

Ignoring Income Taxes, What Is the Estimated Annual Net Operating