4) Rate of Return Example – Non-business property that produces a 6% rate of return

Customer owns property with an equity value of $75,000. The customer has an outstanding agreement with a mining company that they may use the property for mining purposes. This mining company pays the customer $6,000 per year. Net annual income of $6,000 divided by $75,000 = 8% rate of return. This property’s equity value is reduced by $6,000.