Given the Following Information, Calculate the Capitalization Rate for the Following

question 32

Multiple Choice

Given the following information, calculate the capitalization rate for the following apartment complex. Number of apartments: 15; Market Rent (per month) : $1,000; Vacancy and Collection Loss: 10% of potential gross income; Operating Expenses: 5% of effective gross income; Capital Expenditures: 10% of effective gross income; Acquisition Price: $1,710,000.

• A) 8.1%
• B) 9.0%
• C) 9.5%
• D) 10.5%

---

Definitions:

Price Discrimination

A pricing strategy where a seller charges different prices for the same product or service to different customers, based on factors like willingness to pay, market conditions, or customer attributes.

Deadweight Loss

Deadweight loss occurs when an economy's total welfare is not maximized, resulting from inefficiencies such as taxes or subsidies that distort market equilibrium.

Pure-monopoly Market

A market structure where a single firm has the exclusive control over the supply of a product or service, with no close substitutes available, allowing for price setting.