A retail shopping center tenant has a percentage lease with 3% of gross sales above $500,000 annually, plus base rent of $8,000 monthly. If the tenant's annual gross sales are $750,000, what is their total annual rent payment?
Correct Answer
B) $103,500
Base rent: $8,000 × 12 = $96,000. Sales above threshold: $750,000 - $500,000 = $250,000. Percentage rent: $250,000 × 3% = $7,500. Total annual rent: $96,000 + $7,500 = $103,500.
Why This Is the Correct Answer
Option B correctly calculates the total annual rent by adding base rent and percentage rent. Base rent: $8,000 × 12 months = $96,000. Sales above threshold: $750,000 - $500,000 = $250,000. Percentage rent: $250,000 × 3% = $7,500. Total: $96,000 + $7,500 = $103,500. This follows standard percentage lease calculation methodology where percentage rent applies only to sales exceeding the specified threshold, not total sales.
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