Real Estate Principles 3rd Edition by David Ling,Wayne Archer

Exercise 4

Use the following information to answer questions 9 and 10. You have just completed the appraisal of an office building and have concluded that the market value of the property is $2,500,000. You expect potential gross income (PGI) in the first year of operations to be $450,000; vacancy and collection losses to be 9 percent of PGI; operating expenses to be 38 percent of effective gross income (EGI); and capital expenditures to be 4 percent of EGI. What is the effective gross income multiplier (EGIM)
A) 5.56
B) 6.11
C) 10.5
D) 16.38
E) 18.00