London purchased a piece of real estate last year for $84,900

Accounting Sep 18, 2020

London purchased a piece of real estate last year for $84,900. The real estate is now worth $100,900. If London needs to have a total return of 0.24 during the year, then what is the dollar amount of income that she needed to have to reach her objective? Round to two decimal places.

Expert Solution

Total return=(End value-Beginning value+Income)/Beginning value

Given,

Total return= 0.24

Ending value= 100900

Beginning value= 84900

Put the values in the formula;

0.24= (100900- 84900+ Income)/ 84900

0.24= (16000- income)/ 84900

0.24* 84900= 16000- income

Income= 20376- 16000

= 4376

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