Julie Kowalis, an investment analyst, wants to know if her investments during the past four years have earned at least a 12% return. Four years ago, she had the following investments.
1. She purchased a small building for $50,000 and rented space in it. She received rental income of $8,000 for each of the four years and then sold the building this year for $55,000.
2007-06-28 09:00:30 · 2 answers · asked by Anonymous in Business & Finance ➔ Investing
£8,000 a year RENT on a £50k building is 16% !!!!!
No ammount of maths is going to make that less than 12%
... not quite true - if she paid Income Tax at 40% she will only be recieving 7.2% ... of course we don't know how the Rent was taxed, nor do we know what alternative investments she may have had 4 years ago .. . and who cares anyway ? it's not as if she can 'undo' the past :-)
2007-06-28 20:49:19 · answer #1 · answered by Steve B 7 · 0⤊ 0⤋
God I haven't seen these two investment appraisal methods since I did my Accountancy degree!
Even though I work as a chartered accountant (ACCA) I never use these appraisal techniques and so I have forgotten how they work!
Such is life!
2007-06-28 16:05:34 · answer #2 · answered by dougietrotter1945 3 · 0⤊ 0⤋