Question
Use the following to answer questions 1-5: A local 20,000 square foot retail building is 100% occupied by a single tenant. The lease started last
Use the following to answer questions 1-5:
A local 20,000 square foot retail building is 100% occupied by a single tenant. The lease started last week and continues for 10 years. The rent is $7.00 per square foot per year. The landlord pays all the expenses associated with the building. The expenses total $2.00 per square foot per year, and we have determined that they are market-oriented. From a market survey, it is our opinion that 5% is a reasonable vacancy allowance and 2% is a reasonable allowance for collection loss. The market expects a 9% return on investment (overall rate) for investments like this.
The potential gross income (PGI) of the property is _______
| a. | $140,000 | |
| b. | $280,000 | |
| c. | $130,200 | |
| d. | $90,000 |
The effective gross income (EGI) of the property is:
| a. | $90,200 | |
| b. | $130,200 | |
| c. | $280,000 | |
| d. | $140,000 |
The total expenses are:
| a. | $80,000 | |
| b. | $130,200 | |
| c. | $20,000 | |
| d. | $40,000 |
The net operating income (NOI) of the property is:
| a. | $140,000 | |
| b. | $280,000 | |
| c. | $130,200 | |
| d. | $90,200 |
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Financial Management In The Public Sector Tools Applications And Cases
Authors: Xiaohu Wang
2nd Edition
0765625229, 9780765625229
