Jody Asbell and three of her friends purchased a small shopping center in their town. They paid $985,090 and made a down payment of $125,000. They rented five of the stores for $3,400 each per month. Their annual expenses were mortgage interest of $65,000, depreciation of 3% of the purchase price of the shopping center, and taxes, repairs, and insurance totaling $64,300. What is the annual net income?
To determine the annual net income, we need to calculate the total income generated from renting the stores and subtract the total expenses.
First, let's calculate the total income generated from renting the stores:
Total income = Monthly rent per store * Number of stores * 12 months
Monthly rent per store = $3,400
Number of stores = 5
Total income = $3,400 * 5 * 12 = $204,000
Next, let's calculate the total expenses:
Mortgage interest = $65,000
Depreciation = 3% of the purchase price of the shopping center
Taxes, repairs, and insurance = $64,300
Depreciation = 3% * Purchase price of the shopping center
= 3% * $985,090
= $29,552.70
Total expenses = Mortgage interest + Depreciation + Taxes, repairs, and insurance
= $65,000 + $29,552.70 + $64,300
= $158,852.70
Finally, let's calculate the annual net income:
Annual net income = Total income - Total expenses
= $204,000 - $158,852.70
= $45,147.30
Therefore, the annual net income of Jody Asbell and her three friends from the shopping center is $45,147.30.