15. An apartment complex has a vacancy rate of 5%. If the apartment's PGI is $450,000, what is the apartment's vacancy cost?
Answer: A
The apartment's vacancy cost is $22,500.
To calculate the vacancy cost, multiply the potential gross income (PGI) by the vacancy rate. In this case, $450,000 multiplied by 5% equals $22,500.
A) $22,500
This option is correct as it accurately represents the vacancy cost calculated from the provided PGI and vacancy rate. By taking 5% of $450,000, the result is indeed $22,500, which reflects the income lost due to vacancies.
B) $47,500
This option is incorrect as it does not correspond to any calculation based on the given PGI and vacancy rate. A vacancy cost of $47,500 would imply a much higher vacancy rate than 5%, which is not applicable in this scenario.
C) $32,000
This option is also incorrect because it does not align with the calculation of the vacancy cost. A figure of $32,000 would suggest a vacancy rate higher than 5% when applied to the $450,000 PGI, which contradicts the information given.
D) $2,050
This option is incorrect as well since it significantly underestimates the vacancy cost. A vacancy cost of $2,050 would indicate an even lower vacancy rate than the stated 5%, which is inconsistent with the provided data.
Conclusion
The correct answer is $22,500, as it accurately reflects the calculation derived from the apartment complex's PGI and vacancy rate. All other options present figures that either miscalculate the vacancy cost or suggest incorrect vacancy rates, thereby failing to align with the financial context of the question.