Last year, Kristina purchased a new condominium in downtown Toronto for $450,000 and used the property for rental income. During the past year, she rented the condo for $2200 per month. Property taxes were $4500 for the year, and there were no other expenses. The current appraised value of the property is the same as the purchase price. What is Kristina's income yield?

A) 5.9%
B) 6.3%
C) 4.9%
D) 5.25%
E) 4.75%

Question

Meghen Clemens · Accepted Answer

Final Answer : C, Explanation :  Kristina's annual rental income is $2200 * 12 = $26,400. After subtracting the property taxes ($4500), her net income is $26,400 - $4500 = $21,900. The income yield is calculated as (Net Income / Purchase Price) * 100 = ($21,900 / $450,000) * 100 = 4.866%, which rounds to 4.9%.

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