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Homework answers / question archive / Jill purchased a piece of real estate one year ago for $610,000
Jill purchased a piece of real estate one year ago for $610,000. The real estate is now worth $650,000. If Jill needs to have a total return of 9.5 per cent during the year, then what is the dollar amount of income that she needed to have to reach her objective? (to the nearest dollar; don't use $ sign or commas) Answer:
Total return = Capital gain yield + Income yield
9% = (650,000 - 610,000)/610,000 + Annual income/610,000
0.09 = 40,000/610,000 + Annual income/610,000
0.09 = 0.06557377049 + Annual income/610,000
0.09 - 0.06557377049 = Annual income/610,000
0.02442622951 = Annual income/610,000
Annual income = 0.02442622951 * 610,000
Annual income = $14,900.0000011
Answer: 14900
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