Building's Net Income | CFA® Level 1 Exam Preparation

Building's Net Income

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Question

What is the building's net income?

Answers

Explanations

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A. B. C. D.

C

52,919 x .68 = 35,985

To determine the building's net income, we need to understand the components involved in calculating net income. Net income is typically calculated as the difference between total revenues and total expenses.

Without additional information provided in the question, we can assume that the building generates income through rental or lease agreements. Let's break down the calculation step by step:

  1. Gross Rental Income: This refers to the total rental income generated by the building. It is usually the starting point for calculating net income. However, the question does not provide this information.

  2. Rental Expenses: These are the expenses directly associated with the building's operation, such as property taxes, insurance, maintenance costs, and management fees. Unfortunately, the question does not provide any specific details on these expenses.

  3. Other Income: This may include additional sources of income generated by the building, such as parking fees or laundry facilities. However, the question does not mention any other income sources.

  4. Other Expenses: These are expenses not directly related to the building's operation but still incurred by the owner. Examples include interest expenses on loans or legal fees. Since no information is given about these expenses, we can assume they are not relevant to the calculation.

Given the limited information provided in the question, it is not possible to accurately calculate the building's net income. Therefore, none of the answer choices provided (A. $42,646, B. $49,307, C. $35,985, D. $29,324) can be determined as the correct net income for the building.

It is important to note that in real-world scenarios, determining net income involves considering a range of variables and expenses. Without specific details regarding the building's rental income, expenses, and other factors, it is not possible to arrive at an accurate calculation.