Assume You Purchased a Rental Property for $100,000 and Sold

question 76

Multiple Choice

Assume you purchased a rental property for $100,000 and sold it one year later for $115,000 (there was no mortgage on the property) .At the time of the sale,you paid $3,000 in commissions and $1,000 in taxes.If you received $10,000 in rental income (all received at the end of the year) ,what annual rate of return did you earn?

• A) 6%
• B) 11%
• C) 20%
• D) 25%

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Definitions:

Variances

Discrepancies between planned financial outcomes and the actual results, used in budgeting and accounting to analyze and control costs.

Quantity Variance

A variance that is computed by taking the difference between the actual quantity of the input used and the amount of the input that should have been used for the actual level of output and multiplying the result by the standard price of the input.

Standard Quantity

This refers to the predefined amount of materials or labor deemed necessary to produce a single unit of a product under normal operations.

Actual Quantity

The real number of units used or produced, as opposed to planned or estimated quantities.