A property manager for a commercial complex in Montreal is preparing the annual budget. One of the main challenges is estimating common area maintenance (CAM) expenses, which are passed through to tenants. Last year's budgeted CAM was $120,000, and actual CAM was $135,000. For the upcoming year, the manager projects a 5% increase in base CAM costs but anticipates saving $5,000 through a new lighting upgrade. What should be the budgeted CAM amount for the upcoming year?

Question: A property manager for a commercial complex in Montreal is preparing the annual budget. One of the main challenges is estimating common area maintenance (CAM) expenses, which are passed through to tenants. Last year's budgeted CAM was $120,000, and actual CAM was $135,000. For the upcoming year, the manager projects a 5% increase in base CAM costs but anticipates saving $5,000 through a new lighting upgrade. What should be the budgeted CAM amount for the upcoming year?

Answer options:

• $126,000 ✅ $136,750
• $141,750
• $135,000

Correct answer: $136,750

Explanation: Projected base CAM based on last year's actuals: $135,000 * 1.05 = $141,750. Subtract the anticipated savings: $141,750 - $5,000 = $136,750.