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Suppose two apartment buildings recently sold for $25 million dollars. The sales prices for both buildings was based on capitalization rates of 6%. If Building

  1. Suppose two apartment buildings recently sold for $25 million dollars. The sales prices for both buildings was based on capitalization rates of 6%. If Building A has an effective gross income of $100,000 per year and Building B has an effective gross income of $125,000 per year, which of the two buildings is more expensive to operate? Explain briefly how you know.

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