You have recently become the manager of a 100-unit apartment building. The monthly rent on each of these units is $500 and only one unit is vacant. Because the vacancy rate is so low (1%), you suspect that rents are too low. In developing a management plan for the property (analysis of alternatives), you propose to raise rents by 5%. However, you anticipate that the vacancy rate will increase to 5% if you increase the rent by that amount. Operating expenses of $450,000 per year are expected to be unchanged, and the cap rate is 8% (.08).

1. Current gross potential rental income (GPRI)
2. Current vacancy loss
3. Current effective gross income (EGI)
4. Current net operating income (NOI)
5. Current estimated market value
6. Anticipated GPRI after the change is implemented
7. Projected rent loss due to vacancy
8. Anticipated EGI
9. Anticipated NOI
10. Anticipated market value
11. Calculate the incremental increases in NOI and property value and the amount by which these two elements would increase for each additional unit that is leased.