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London purchased a piece of real estate last year for $83,600. The real estate  is now worth $100,100. If London needs to have a total return of 0.22 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.

London purchased a piece of real estate last year for $83,600. The real estate  is now worth $100,100. If London needs to have a total return of 0.22 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.

Essentials Of Investments
Essentials Of Investments
11th Edition
ISBN:9781260013924
Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Chapter1: Investments: Background And Issues
Section: Chapter Questions
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London purchased a piece of real estate last year for $83,600. The real estate  is now worth $100,100. If London needs to have a total return of 0.22 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
Step 1

Purchase price=$83,600

Present worth=$100,100

Rate of return=0.22

 

⇒Total Return=(Present worth-Purchase price+ Income)Purchase price⇒0.22=($100,100-83,600+Income)83,600  ⇒0.22×83,600)=16,500+Income⇒Income=18,392-16,500=$1,892

 

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