Consider the information in the table below.What is the rate of return the investor would earn on the additional funds invested in renovating the property,assuming that the investor would not borrow any additional funds?

Question

Quizplus · Accepted Answer

To find the rate of return on the additional funds invested in renovating the property, we need to calculate the net operating income (NOI) and divide it by the amount invested.

NOI = Rental Income - Expenses

NOI with renovations = $60,000 - $22,000 = $38,000

Additional funds invested = $500,000 - $400,000 = $100,000

Rate of return = NOI / Additional funds invested

Rate of return = $38,000 / $100,000 = 0.38 or 38%

Therefore, the rate of return on the additional funds invested in renovating the property is 6.0%.

Consider the Information in the Table Below