Suppose you are opening a 1,000-square-foot baseball card store. Your lease calls for a flat monthly rent of $1.75 per square foot plus 5 percent of your gross annual sales. What is the total rent you will pay in one year if you have sales of $85,000?
1,000 * 1.75 = $1,750
0.05 * 85,000 = ?
Add the two products together.
72,000
Ah, renting a baseball card store, eh? That's a pitch-perfect idea! Let's calculate the total rent you'll be throwing this way.
First, we calculate the flat monthly rent. With 1,000 square feet and a rate of $1.75 per square foot, that's 1,000 * $1.75 = $1,750 per month.
Next, we find the additional rent based on your gross annual sales. Since your sales are $85,000, we take 5% of that amount, which is $85,000 * 0.05 = $4,250.
Now, let's calculate the grand total for the year. Multiply the monthly rent ($1,750) by 12 months to get $1,750 * 12 = $21,000 for the flat yearly rent.
Add the additional rent based on your sales ($4,250) to get a total of $21,000 + $4,250 = $25,250.
Voila! The total rent you will pay in one year is $25,250. That's quite a lot of baseball cards, but hey, it's worth it for the love of the game!
To calculate the total rent you will pay in one year, you will need to calculate the flat monthly rent and the percentage of gross annual sales separately, and then add them together.
1. Calculate the flat monthly rent:
Multiply the area of the store (1,000 square feet) by the monthly rental rate per square foot ($1.75): 1,000 sq ft * $1.75/sq ft = $1,750.
2. Calculate the percentage of gross annual sales:
Multiply the gross annual sales ($85,000) by the percentage rate (5% or 0.05): $85,000 * 0.05 = $4,250.
3. Calculate the total rent for one year:
Add the flat monthly rent ($1,750) to the percentage of gross annual sales ($4,250): $1,750 + $4,250 = $6,000.
Therefore, the total rent you will pay in one year, given sales of $85,000, would be $6,000.