The renewal probability is assumed to be 60% for a particular lease with 12 months vacant if the lease is not renewed. The expected vacancy at the end of the lease is:

(A) 4.8 months

(B) 7.2 months

(C) 9.0 months

(D) 12.0 months

(A) 4.8 months

Explanation:

After the expiration of a lease, a maximum of one third allowance is usually given.

Therefore, The expected vacancy at the end of this lease can be calculated as follows:

The expected vacancy = 60% * 12 * (2 : 3) = 4.8 months

Therefore, the expected vacancy at the end of the lease is 4.8 months.