Business
Business, 18.12.2019 17:31, safi30360oz0c34

You are considering the purchase of an office building for $1.5 million today. your expectations include the following:

a. first-year potential gross income of $340,000;
b. vacancy and collection losses equal to 15 percent of potential gross income;
c. operating expenses equal to 40 percent of effective gross income and capital expenditures equal 5 percent of egi.
d. you expect to sell the property five years after it is purchased.
e. you estimate that the market value of the property will increase four percent a year after it is purchased and you expect to incur selling expenses equal to 6 percent of the estimated future selling price.

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