What is the rent needed to support the million price tag, Financial Management

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What is the rent needed to support the million price tag

Problem

Assume the asking price for a small apartment property is $1,800,000, and similar properties are selling at cap rates of 6.5%. If you assume VC&L are 5 percent of PGI and operating expenses are 40 percent of EGI. What is the rent (i.e., PGI) needed to support the $1.8 million price tag?

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Financial Management: What is the rent needed to support the million price tag

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