Estimate the present market value of a 10 unit apartment house given the following information pertaining to the property. Each apartment has 1200 square feet of living area, 3 bedrooms, and kitchen appliances. Tenants pay their own utilities. The value of the land is $250,000. The estimated replacement value is $120 per square foot for this type of construction.

Total operating expenses, property insurance and property taxes for the year, $24,000.

Gross rental monthly income, $12,000 per month (consider a 5% vacancy allowance)

Management fees are 10% of total rents collected. The building is 25 years old and has an estimated future useful life of 25 additional years. First mortgages are available at 6% for 70% of the purchase price. Equity will be used as the other 30% of the purchase price and requires a return of 12%

Compute the following:

a) Gross rental income per year less vacancy _________

b) Total annual expenses and property management fees________

c) Net income before capitalization_________

d) Weighted average cost of capital_________

e) APR per year needed to recover the investment costs over the remaining future life of the project_______

f) Capitalization rate adjusted for recapture_________

g) Estimated value of this property using the income approach________