Question

a property has a net income of $9,500 per year. To earn 7% on his investment, how much will Luis pay for the property? Round to the nearest whole dollar.

Answer 1

Luis will pay $135,714 for the property to achieve a 7% rate of return on his investment, after rounding to the nearest whole dollar.

Step-by-step explanation:

To determine how much Luis will pay for the property to earn a 7% return on his investment, we can set up the equation Net Income = Investment × Rate of Return. Given that the net income of the property is $9,500 per year, and Luis wishes to earn a return of 7%, we plug these values into the equation:

$9,500 = Investment × 0.07

To solve for the Investment, we rearrange the equation:

Investment = $9,500 / 0.07

Investment = $135,714.29

Rounding to the nearest whole dollar, Luis will pay $135,714 for the property. This calculation falls under financial mathematics, which is an important part of real estate investment strategies.