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A man bought a house for N1800 a d received N360 as rent for a year. What is the ratio of the annual rent to the purchase price?

Show workings bit by bit

Step 1: Calculate the rent as a percentage of the purchase price:

N360 ÷ N1800 = 0.2

Step 2: Convert the percentage to a ratio:
0.2 = 1:5

Therefore, the ratio of the annual rent to the purchase price is 1:5.

Did you know?

Did you know that the ratio of the annual rent to the purchase price can help us understand the profitability of buying a property as an investment? Let's calculate it step by step using an example: Let's say a man bought a house for N1800 (Naira) and received N360 (Naira) as rent for a year. To find the ratio of the annual rent to the purchase price, we divide the rent by the purchase price: N360 (rent) / N1800 (purchase price) = 0.2 So, the ratio of the annual rent to the purchase price is 0.2. This means that the annual rent is 20% of the purchase price. Understanding this ratio can help determine the profitability of investing in real estate. If the rental ratio is high, it implies that the investment is generating a higher return compared to the initial purchase price. On the other hand, a low rental ratio might indicate that the investment is less profitable or might require further analysis. Knowing the annual rent-to-purchase price ratio is essential for potential real estate investors who want to assess the profitability and potential return on their investment.