87. A tenant's annual expenses included the following: $24,000 for base rent, $8,400 for taxes, insurance, and common area maintenance (triple net). The property manager receives a fee of 3% of gross annual rent. How much will the property manager receive?
Answer: A
$720
The property manager receives a fee of 3% of the gross annual rent, which totals $24,000. Calculating 3% of $24,000 results in a fee of $720.
A) $720
This option correctly calculates the property manager's fee by applying the 3% rate to the gross annual rent of $24,000. The calculation is straightforward: 0.03 x $24,000 = $720, making this the correct answer.
B) $1,000
This option is incorrect as it does not accurately reflect the 3% fee calculation. A fee of $1,000 would imply a gross annual rent of approximately $33,333, which is not the case based on the provided rent figure of $24,000.
C) $1,080
This amount is also incorrect because it suggests a higher percentage fee than 3%. Specifically, $1,080 would represent a fee based on a gross annual rent of $36,000, which again does not align with the actual rent of $24,000.
D) $1,332
This option is incorrect and significantly overestimates the property manager's fee. It would imply a gross annual rent of $44,400, which is not applicable here since the rent is only $24,000.
Conclusion
The correct answer of $720 is derived from a precise calculation of 3% of the gross annual rent of $24,000. All other options fail because they either miscalculate the percentage or assume an incorrect gross rent amount, reinforcing that understanding the fee structure is crucial for accurate financial assessment in property management.