The most important number in most financial plans is projected revenue. Why? For

Question

The most important number in most financial plans is projected revenue. Why? For one thing, without a realistic estimate of your revenue, you can’t accurately calculate your costs. For example, you just bought a condominium in Hawaii, which you plan to rent out to vacationers. Because you live in snowy New England, however, you plan to use it yourself from December 15 to January 15. You’ve also promised your sister that she can have it for the month of July. Now, in Hawaii, condo rents peak during the winter and summer seasons—namely, December 15 to April 15 and June 15 to August 31. They also vary from island to island, according to age and quality, number of rooms, and location (on the beach or away from the beach). The good news is that your relatively new two-bedroom condo is on a glistening beach in Maui. The bad news is that no one is fortunate enough to keep a condo rented for the entire time that it’s available. What information would you need in order to estimate you rental revenues for the year?

Explanation / Answer

Here the most vital information required is the price charged by other condominium owners in the same place . Price might vary for new and old condos . Price can also vary for the term it is given as a rent . The demand structure of the market is eesential to calculate rental revenues . Because the condo cannot be rented for the entire time since you are using it yourself and letting your sister use it in july , so that is likely to bring down revenue .

Related Questions

Navigate

• Browse (All)
• Browse T
• Subjects

Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.