Question

A business tenant has a percentage lease stating rent payment is greater of 2% of the business’s total gross sales volume or a minimum base rental of $1,000.00 per month. In the past year, sales totaled $435,000. How much rent did the business pay?

Answer 1

Answer:

$12,000

Step-by-step explanation:

By paying the minimum rent, the tenant would pay $1000 * 12 = $12,000.

Rent cannot be less than $12,000.

If the 2% of sales is greater than $12,000, then 2% of sales becomes the rent.

Now we calculate 2% of annual sales.

2% * $435,000 = $8,700

Since the minimum rent, $12,000, is greater than 2% of sales, then rent is $12,000.