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16 June, 14:30

Given the following information, calculate the effective gross income. Property: 4 office units, Contract rents per unit: $2500 per month, Vacancy and collection losses: 15%, Operating Expenses: $42,000, Capital Expenditures: 10%A. $48,000

B. $60,000

C. $95,000

D. $102,000

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  1. 16 June, 17:30
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    D. $102,000

    Explanation:

    The computation of the effective gross income is shown below:-

    Effective gross income = Gross income - Vacancy expense

    = ($2500 per month cost * 12 months * 4 office units) - ($2500 per month cost * 12 months * 4 office units * 15% collective losses)

    = ($2,500 * 12 * 4) - (($2,500 * 12 * 4 * 15%)

    = $120,000 - $18,000

    = $102,000
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