Katie Scarlett is analyzing the same $15-$unit apartment building for a client for possible purchase. She expanded her analysis from just the DCF $($Income$)$ to include the Direct Cap $($Income$),$ the Cost and the Market approaches to value. Remember she estimated the gross potential rents are $$250,000$ in Year $1$ and are expected to grow $5\%$ for through Year $3$ and then by $3\%$ starting in Year $4$ as new supply comes on line. Katie assumes a more typical vacancy and credit risk of $5\%$ for all periods. She refines her estimate for expenses since they run more inline with $45\%$ of Effective Gross Income at Year $1$ and will grow independently at the inflation rate $3\%$ per year.

She analyzed the replacement costs in the market and they are approximately $$155,000/$unit including cost of land. She identifies three sales comparables of similar apartment properties in the market that have sold within the last $6$ months. Based on these recent sales, the average cost is $$140,000/$unit$.$ The average cap rate is $6\mathrm{.}5\%$

Katie is going to analyze the investment on a $5-$year hold. The client wants Katie to refine the bid price to take into consideration both the cost and market approach to value.

Katie$$s client wants to know the equity multiple for the investment. What is the equity multiple Katie calculates?