A condominium corporation in Edmonton has just received its updated Reserve Fund Study. The study recommends an annual contribution of $120,000 to maintain the reserve fund at an appropriate level. The corporation has 60 units, and the current monthly condominium fees are $300 per unit. What is the current annual contribution to the reserve fund from these fees, and how much short are they of the recommended amount?

Question: A condominium corporation in Edmonton has just received its updated Reserve Fund Study. The study recommends an annual contribution of $120,000 to maintain the reserve fund at an appropriate level. The corporation has 60 units, and the current monthly condominium fees are $300 per unit. What is the current annual contribution to the reserve fund from these fees, and how much short are they of the recommended amount?

Answer options:

• Current contribution: $216,000; Shortfall: $0
• Current contribution: $36,000; Shortfall: $84,000
• Current contribution: $216,000; Shortfall: $0 ✅ Current contribution: $72,000; Shortfall: $48,000

Correct answer: Current contribution: $72,000; Shortfall: $48,000

Explanation: Assuming a typical 25% allocation of monthly condo fees to the reserve fund, the annual contribution is (60 units * $300/unit * 12 months) * 0.25 = $72,000. Therefore, the shortfall is $120,000 - $72,000 = $48,000. This indicates the corporation needs to adjust its contributions.