Suppose you pay $100,000 for a property today. The property appreciates 8% in the first year, and 12% in the second year. The third year yield was 7%. What was the income generated by the property in year 3?

Question

Quizplus · Accepted Answer

The property's value at the end of the first year is $100,000 * 1.08 = $108,000. At the end of the second year, it's $108,000 * 1.12 = $120,960. The 7% yield in the third year on $120,960 is $120,960 * 0.07 = $8,467.

Suppose You Pay $100,000 for a Property Today