53. A property with an annual rental income of $48,000 is priced at $640,000 and also has a monthly other income of $300. Based on this information, what is its gross income multiplier (GIM)?
Answer: D
The gross income multiplier (GIM) is 13.33.
To calculate the gross income multiplier (GIM), you need to divide the property price by its total gross income. In this case, the total annual income includes both the rental income and the other income, which adds up to $51,600. Dividing the property price of $640,000 by the total gross income of $51,600 results in a GIM of 13.33.
A) 12.4
Option A is incorrect. A GIM of 12.4 does not match the calculated value based on the property's price and total gross income. The calculation requires both the annual rental income and any additional income, which this option fails to consider correctly.
B) 3,600
Option B is incorrect. A GIM of 3,600 is not a valid calculation for this scenario. GIM is typically expressed as a ratio and should not be in such a large number without context, indicating a misunderstanding of the calculation method.
C) $51,600
Option C is incorrect as it represents the total gross income rather than the GIM. While $51,600 is the right figure for the property's annual gross income, it does not answer the question regarding the gross income multiplier.
D) 13.33
Option D is correct. To find the GIM, the total property price of $640,000 is divided by the total gross income of $51,600 (annual rental income of $48,000 plus monthly other income of $300 multiplied by 12 months), resulting in a GIM of 13.33.
Conclusion
The correct answer, 13.33, accurately reflects the gross income multiplier calculated from the property's total gross income and price. Options A, B, and C fail to provide the correct ratio or relevant figures necessary for calculating the GIM, confirming that D is the only correct choice.