You want to buy an apartment building. The current owner tells you that the current annual net operating income for this property is $923,450. He wants $7,500,000 for his apartment building. Based on his price, what is the capitalization rate (cap rate) for this property? A. 13.19% B. 12.31% C. 14.99% O D. 11.54% Summary Income Statement 2018e 2019e 2020e 2021e Total Revenue 510,617 $ 475,411 $ 485,920 $ 550,720 Operating Expenses Compensation of Officers Salaries 89,798 $ 134,296 $ 117,745 $ 134,119 $ 80,244 $ 143,111 $ 54,889 140,410 Employee Benefts Repairs & Maintenance Rent Expense Taxes and Licenses Depreciation Advertising Other 4,848 $ 65 $ 6,233 $ 75 $ 5,516 50 $ 4,127 250 11,100 $ 17,818 $ 11,100 $ 19,991 $ 11,200 $ 17,909 $ 12,300 15,600 2 $ 3,657 $ 5,816 $ 3,512 12,578 $ 12,940 $ 13,954 $ 12,036 63,676 $ 66,859 $ 372,719$ 72,821 $ 350,621 $ 75,047 318,171 $ 334,181 $ $ 141,230 $ Total Operating Expenses Operating Income 113,201 $ 159,996 $ 232,549 4,958 $ 5,313 $ 107,888 $ 4,072 $ Interest 3,533 229,015 Pre-tax Net Income $ 136,272 $ 155,924 $ 42,244 $ 48,336 $ 107,588 $ Taxes 33,445 $ 70,995 158,021 Net Income 94,028 $ 74,443 $ 46 A Summary Balance Sheet 2018e 2019e 2020e 2021e Assets Cash Receivables $ 21,991 $ 23,680 $ 16,911 $ 4,385 $ 21,296 $ 16,541 $ 18,239 $ 23,479 1,571 Current Assets $ 45,671 2,198 $ 18,239 $ 10,725 25,049 Net Buildings & Other Depreciable Assets $ Net Intangible Assets Other Assets 7,212 68,469 $ 62,250 $ 275 $ 56,031 $ 50,238 $ 275 $ 275 Total Assets $ 116,613 $ 100,362 $ 85,270 $ 82,500 Liabilities and Equity Accounts Payable Other Current Liabilities 7,630 $ 277 $ 184 $ 4,889 $ (1,066) 678 552 $ 803 $ 5,692 $ Current Liabilities Loans From Shareholders 7,907 $ 736 $ (388) $ 81,402 $ $ 14,360 $ Mortgages, Notes, Bonds Payable Other Liabilities 53,630 $ 62,795 $ 44,003 126 126 126 $ Captal Stock Retained Earnings Total Liabilities and SE 3,813 3,813 $ 13,576 $ 3,813 $ 3,813 23,365 $ $ 116,613 26,965 $ 35,071 82,500 100,362 $ 85,270 $ A A