Robert Cooper is considering purchasing a piece of business rental property containing stores and offices at a

Question:

Robert Cooper is considering purchasing a piece of business rental property containing stores and offices at a cost of $250,000. Cooper estimates that annual disbursements (other than income taxes) will be about $12,000. The property is expected to appreciate at the annual rate of 5%. Cooper expects to retain the property for 20 years once it is acquired. Then it will be depreciated as a 39-year real-property class (MACRS), assuming that the property will be placed in service on January 1st. Cooper's marginal tax rate is 30% and his is 15%. What would be the minimum annual total of rental receipts that would make the investment break even? MARR
Minimum Acceptable Rate of Return (MARR), or hurdle rate is the minimum rate of return on a project a manager or company is willing to accept before starting a project, given its risk and the opportunity cost of forgoing other...