Given the following information, calculate the effective gross income. Property: 4 office units, Contract rents per unit: $2500 per month, Vacancy and collection losses: 15%, Operating Expenses: $42,000, Capital Expenditures: 10%
A) $100,000
B) $102,000
C) $120,000
D) $135,000

Question

Quizplus · Accepted Answer

Effective gross income = (Contract rents per unit * Number of units) - Vacancy and collection losses - Operating expenses - Capital expenditures

Number of units = 4

Contract rents per unit = $2500

Contract rents for all units = Contract rents per unit * Number of units = $2500 * 4 = $10,000

Vacancy and collection losses = 15% of Contract rents for all units = 0.15 * $10,000 = $1500

Operating expenses = $42,000

Capital expenditures = 10% of Contract rents for all units = 0.1 * $10,000 = $1000

Effective gross income = ($10,000 - $1500 - $42,000 - $1000) = $6,500 per month

Effective gross income per year = $6,500 * 12 = $78,000

Therefore, the best choice is B, with an effective gross income of $102,000 per year.

Given the Following Information, Calculate the Effective Gross Income