Exercise: Chapter $8$

You are considering to purchase a building consists of $10$ units of offices. Each unit is expected to

have a rental income of $$4,000$ per month. Vacancy and collection loss is estimated at $8$ percent.

The following data have been given to you:

Items Expenses

Electricity $15000$

Water $8000$

Janitor $24000$

Mortgage payment $180000$

Maintenance $30000$

Capital expenditure $18000$

Management costs $20000$

Depreciation $30000$

Required:

a$)$ Prepare the net operating income statement for the first year.

b$)$ Identify the items that should not be included in the statement.