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

Exercise 9

Use the following information to answer questions 8-9. You are considering purchasing an office building for $2,500,000. You expect the potential gross income ( PGI ) in the first year to be $450,000; vacancy and collection losses to be 9 percent of PGI; and operating expenses and capital expenditures to be 38 percent and 4 percent, respectively, of effective gross income ( EGI ). What is the implied first-year overall capitalization rate
A) 9.5 percent.
B) 10.0 percent.
C) 10.5 percent.
D) 11.0 percent.