Given the following information, calculate the capitalization rate for the following apartment complex:
number of apartments: 15;
market rent (per month): $1,000;
vacancy and collection loss: 10% of potential gross income;
operating expenses: 5% of effective gross income;
capital expenditures: 10% of effective gross income;
acquisition price: $1,710,000.

Collections per month  = 11,250

Monthly rate = 0.0066

Annual rate = 8.1%

Explanation:

Calculations of capitalization rate for the following apartment complex are as follows:

Collections per month is calculated as = 1000*15*(1 - 0.10-0.05-0.10) = 11,250

Monthly rate is calculated as= 11,250/1,710,000 = 0.0066

Annual rate is calcuated as = (1 + 0.0066)^12 - 1 = 8.1%.

Hence ,Collections per month are 11,250  ,Monthly rate is 0.0066  and annual rate is 8.1%

answer the law of increasing costs;