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Answer :
Given,An investment of $50,000 in property taxes and rental income received of $800 per month, annual taxes of $1,500 paid monthly for four years.
We need to calculate the Return on Investment (ROI).Let us begin with calculating the total amount of rental income received by multiplying the monthly rental income by 12 and then multiplying the resultant by 4, as it is for 4 years. Rental income received= 12 × 4 × 800 = $38,400
Now, let us calculate the total amount of taxes paid by multiplying the annual taxes by 4. Annual taxes = $1,500Total taxes paid
= 4 × $1,500
= $6,000Now, let us calculate the ROI. ROI
= (Total rental income received − Total expenses)/Total investment
= (38,400 − 6,000)/50,000
= 32,400/50,000
= 0.648 or 64.8%
The ROI for the investment is 64.8%. Hence, e. 4.25% is the correct option.
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