Question

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. $48,000

B. $60,000
C. $95,000
D. $102,000

Answer 1

D. $102,000

Step-by-step explanation:

The computation of the effective gross income is shown below:-

Effective gross income = Gross income - Vacancy expense

= ($2500 per month cost × 12 months × 4 office units) - ($2500 per month cost × 12 months × 4 office units × 15% collective losses)

= ($2,500 × 12 × 4) - (($2,500 × 12 × 4 × 15%)

= $120,000 - $18,000

= $102,000