Hi,
will annual income be subtracted from the annual expense to derive net expense, which is an input to calculate the required return?
As in the example, she has annual income of $21,500 and the expense of $125,000. But they do not account for $21,500 in the calculation.
Another point is that the question asked to calculate return for the coming year; however, in the solution, the expense is not next year expense, but this year expense.
Is it right with the solution or am I missing sth? Many thanks.
