Real Estate Math

A commercial building has 12,000 square feet of leasable space. Rent is $18 per square foot per year. If the vacancy rate is 10%, what is the annual effective gross income?

A$172,800
B$194,400✓ Correct
C$210,600
D$216,000

Explanation

Gross potential income = 12,000 sq ft × $18 = $216,000. Vacancy = 10% × $216,000 = $21,600.

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