Real Estate Math
A commercial building has gross potential income of $120,000 per year. Vacancy and collection loss is 5%. Operating expenses are $40,000. What is the net operating income?
A$74,000✓ Correct
B$80,000
C$114,000
D$68,000
Explanation
Effective Gross Income = $120,000 − ($120,000 × 5%) = $120,000 − $6,000 = $114,000. NOI = $114,000 − $40,000 = $74,000.
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