A building that costs USD 7,500, rents for USD 62.50 a month. If insurance and repairs amount to $1 \%$ each year, what is the net rate of interest earned on the investment?
Method One: I assumed that USD 62.50 is interest and includes the $1 \%$. Now I got interest as 0.99$\times$62.50. Using the formula $$i=\frac{I}{pT}=\frac{0.99\times 62.50}{7500 \times \frac{1}{12}}=0.099$$
Method Two: I assumed that USD 62.50 is interest. Then, I thought that 7500 must include 1% in order to be taken as principle. Using the formula $$i=\frac{I}{pT}=\frac{ 62.50}{7500 \times 1.01 \times \frac{1}{12}}=0.0990099$$
The answer in the book I am using is $0.09$= $9 \%$
Can someone provide guidance
Take the $1\%$ out of the receivable. Since $1\%$ of $7500$ is $75$ then, over the year your return is $$62.50\times 12-75=675$$
Since interest is $\frac {\text {return}}{\text {cost}}$ we get that interest is $$\frac {675}{7500}=.09=9\%$$