If an investment yields a 9% return and the desired income is $37.50 per month, what is the total investment needed?

To determine the total investment needed to achieve a desired monthly income of $37.50, given a return rate of 9%, you first need to calculate the annual income requirement. Since the desired monthly income is $37.50, you would multiply this figure by 12 to find the annual income:

$37.50 x 12 = $450.

Next, using the 9% return rate, you can set up the equation to find the total investment. The formula to find the investment (I) based on the annual return (R) is:

R = (I x return rate).

In this case, you can rearrange the formula to solve for the total investment:

I = R / return rate.

Substituting the values into the equation:

I = $450 / 0.09 (which is the decimal form of 9%).

Calculating this gives:

I = $450 / 0.09 = $5,000.

Thus, the total investment needed to generate monthly income of $37.50 at a 9% return is indeed $5,000. This understanding emphasizes how to translate desired income into necessary investment by utilizing the expected rate of return, a vital skill in real estate and investment analysis.