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19 May, 12:03

An office building rents for $600,000, has expenses of $400,000, and a cash flow of $100,000. The prevailing gross rent multiplier is 8. Using the GRM, what is the value of the building?

a. $800,000

b. $1,600,000

c. $3,200,000

d. $4,800,000

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  1. 19 May, 13:14
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    d. $4,800,000

    Explanation:

    Gross Rent Multiplier (GRM) = Property Value / Annual Gross Rents

    Annual Gross Rents X Gross Rent Multiplier (GRM) = Property Value

    So, According to given formula

    Gross Rent = $600,000

    Gross Rent Multiplier (GRM) = 8

    Building Value = Gross Rents X Gross Rent Multiplier (GRM)

    Building Value = $600,000 X 8

    Building Value = $4,800,000
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