21. Estimate the market value of the shopping center described below using the direct capitalization approach to valuation.

Property type: Drug store-anchored shopping center

Asking price: $20 million

Leasable space: 75,000 square feet

Average rent: $30 per square foot per year

Other income: $1 per square foot per year

Annual rent growth: 3% per year

Annual other income growth: 5% per year

Vacancy and collection losses: 7.5% of potential gross income

Capital expenditures: 2% of effective gross income

Operating expenses: 40% of effective gross income

Discount rate: 15%

Going-in cap rate: 7%

Going-out cap rate: 7.5%

Selling expenses: 3% of transaction amount

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