Viola is investing in some rental property in Collegeville and is investigating

Question

Viola is investing in some rental property in Collegeville and is investigating her income from the investment. She knows the rental revenue will increase each year, but so will the maintenance expenses. She has been able to generate the data that follows regarding this investment opportunity. Assume that all cash flows occur at the end of each year and that the purchase and sale of this property are not relevant to the study. If Viola's MARR = 5% per year, what is the FW of Viola's projected net income? Draw the cash flow diagram. $18, 048.05 $19, 765.67 $21, 102.72 $25, 155.80

Explanation / Answer

Answer is B

We get current income by netting expenses from revenue and get the results as follows

19765.6

Year Income FV of Income 1 2000 3102.656 2 2000 2954.911 3 1900 2673.491 4 1800 2412.172 5 1700 2169.679 6 500 607.7531 7 1500 1736.438 8 1400 1543.5 9 1300 1365 10 1200 1200 Total

19765.6

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