You are considering purchasing an office building for $1,800,000. You expect the potential gross income (PGI) in the first year of operations to be $350,000; vacancy and collection losses to be 7 percent of PGI; and operating expenses and capital expenditures to be 35 percent of effective gross income (EGI). What is the implied first year overall capitalization rate?

Question 21 options:

a)

9.50%

b)

10.26%

c)

10.49%

d)

11.75%

e)

13.20%