Question

Jill purchased a piece of real estate one year ago for $610,000. The real estate is now worth $680,000. If Jill needs to have a total return of 11.1 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 1

Return = (Closing Value - Opening value+Income earned)/Opening value

11.1% = (680,000 - 610,000 + Income earned)/610,000

Required Income = -$2,290

Hence, no income required