Question: You are considering purchasing an office building for $ 2 , 5 0 0 , 0 0 0 . You expect the potential gross income

You are considering purchasing an office building for $2,500,000. You expect the potential gross income (PGI) in the first year to be $450,000; vacancy and collection losses to be 9 percent of PGI; and operating expenses and capital expenditures to be 38 percent and 4 percent, respectively, of effective gross income (EGI).

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