A percentage lease has a base rent of $60,000 per year and a percentage rent rate of 6 percent. The natural breakpoint is the sales volume at which percentage rent begins. What is the natural breakpoint for this lease?
Correct Answer
D) $1,000,000
Natural breakpoint = Base rent / Percentage rate = $60,000 / 0.06 = $1,000,000. Percentage rent begins when gross sales exceed $1,000,000.
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