Felice bought a duplex apartment at a cost of $150,000. Her mortgage payments on the property are $940 per month, $121 of which can be deducted from her income taxes. Her real estate taxes total $1,440 per year, and insurance costs $900 per year. She estimates that she will spend $1,000 each year per apartment for maintenance, replacing appliances, and other costs. The tenants will pay for all utilities.
What must she charge to make $2,000 in profit each year?

Respuesta :

Felice should charge $16,620 to make $2,000 in profit each year on the duplex apartment.

Data and Calculations:

Mortgage loan = $150,000

Mortgage monthly payment = $940

Mortgage yearly payment = $11,280 ($940 x 12)

Real estate taxes = $1440

Insurance cost per year = $900

Property maintenance = $1,000

Total PITI (Principal + Interest + Taxes +Insurance) = $14,620

Expected profit = $2,000

Total revenue per year = $16,620 ($14,620 + $2,000)

Thus, Felice should charge $16,620 to make $2,000 in profit each year on the duplex apartment.

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