1. Use the information provided below to estimate the market value of the apartment building that has been described using the direct capitalization approach.

Type of Property: Apartment Building

Number of Units: 25

Average Rent: $1,000 per unit per month

Vacancy and Collection Losses: 10% of potential gross income

Other Income: $20 per unit per month

Operating Expenses: 40% of effective gross income

Capital Expenditures: 3% of effective gross income

Going-In Cap Rate: 5.5%