You are considering purchasing an office building for $1,800,000. You expect the potential gross income (PGI) in the first year of operations to be $350,000; vacancy and collection losses to be 7 percent of PGI; and operating expenses and capital expenditures to be 35 percent of effective gross income (EGI). What is the implied first year overall capitalization rate
a) 9.50%
b) 10.26%
c) 10.49%
d) 11.75%
e) 13.20%
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