If an investor pays €10M for a property and expects a 5% yield, what annual rent do they seek?

If an investor pays €10M for a property and expects a 5% yield, what annual rent do they seek?

• A. €400,000
• B. €500,000
• C. €600,000
• D. €700,000

Answer: (B)

To determine the annual rent that an investor seeks, you can use the formula for yield, which is defined as the annual rent divided by the property purchase price. In this case, the investor paid €10 million (the purchase price) and expects a yield of 5%. To find the desired annual rent, you multiply the purchase price by the yield percentage: Annual Rent = Purchase Price × Yield Annual Rent = €10,000,000 × 0.05 Annual Rent = €500,000 Therefore, the investor aims for an annual rent of €500,000 to achieve their expected yield of 5%. This makes option B the correct answer, as it aligns perfectly with the calculations based on the information given.

To determine the annual rent that an investor seeks, you can use the formula for yield, which is defined as the annual rent divided by the property purchase price. In this case, the investor paid €10 million (the purchase price) and expects a yield of 5%.

To find the desired annual rent, you multiply the purchase price by the yield percentage:

Annual Rent = Purchase Price × Yield

Annual Rent = €10,000,000 × 0.05

Annual Rent = €500,000

Therefore, the investor aims for an annual rent of €500,000 to achieve their expected yield of 5%. This makes option B the correct answer, as it aligns perfectly with the calculations based on the information given.