Fight Finance

Courses  Tags  Random  All  Recent  Scores

Scores
keithphw$6,011.61
Jade$1,815.80
Chu$789.98
royal ne...$750.00
Leehy$713.33
Visitor$650.00
JennyLI$625.61
Visitor$590.00
Visitor$550.00
Visitor$550.00
Visitor$540.00
ZOE HY$540.00
Visitor$500.00
Yizhou$489.18
Visitor$464.70
Visitor$460.00
Visitor$460.00
Jasper.sun$460.00
Visitor$442.43
niki,zhang$440.00
 

Question 404  income and capital returns, real estate

One and a half years ago Frank bought a house for $600,000. Now it's worth only $500,000, based on recent similar sales in the area.

The expected total return on Frank's residential property is 7% pa.

He rents his house out for $1,600 per month, paid in advance. Every 12 months he plans to increase the rental payments.

The present value of 12 months of rental payments is $18,617.27.

The future value of 12 months of rental payments one year in the future is $19,920.48.

What is the expected annual rental yield of the property? Ignore the costs of renting such as maintenance, real estate agent fees and so on.




Copyright © 2014 Keith Woodward