If an investor purchases a mountain ski cabin for $120,000 cash and the monthly net rental income is $600, what is the rate of return on the investment?

Name: If an investor purchases a mountain ski cabin for $120,000 cash and the monthly net rental income is $600, what is the rate of return on the investment?
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Question

Quizplus · Accepted Answer

The annual net rental income is $600 x 12 = $7,200. The rate of return is calculated as (Annual Net Income / Investment) x 100 = ($7,200 / $120,000) x 100 = 6%.

If an Investor Purchases a Mountain Ski Cabin for $120,000