84. Jerry owns an apartment building with 10 units. The rent for all units is $2,000 per month. The building is 50% vacant. What is the potential gross income (per month) of Jerry's property?
Answer: D
The potential gross income of Jerry's property is $20,000 per month.
To calculate the potential gross income, we multiply the total number of units by the rent per unit. In this case, Jerry has 10 units, each renting for $2,000, resulting in a potential gross income of $20,000 per month, regardless of the vacancy rate.
A) $10,000
This option is incorrect because it reflects only half of the total rental income that could be generated if all units were occupied. The calculation does not consider the total capacity of the building.
B) $5,000
This option is incorrect as it significantly underestimates the potential gross income. It implies that only a fraction of the rental income is being accounted for, which does not align with the total rent for all units.
C) $15,000
This option is also incorrect. While it represents a substantial amount, it does not accurately reflect the total income potential when all units are occupied. This figure suggests that some units are generating income, but it does not represent the complete potential gross income.
D) $20,000
This option is correct as it accurately calculates the potential gross income by multiplying the total number of units (10) by the rent per unit ($2,000). This total represents the maximum income Jerry could achieve if all units were rented.
Conclusion
The correct answer is $20,000, as it accurately reflects the potential gross income based on the total number of rental units and their respective rental prices. The other options fail to capture the full income potential of the property, either by miscalculating the rental income or misrepresenting the occupancy status.