QUESTIONS 109 THROUGH 114 RELATE TO ALTERNATIVE INVESTMENTS

110. An analyst is evaluating an investment in an apartment complex based on the following annual data: Gross potential rental income $2,100,000Estimated vacancy and collection expenses 3%Operating expenses $1,600,000Depreciation 300,000Current mortgage rate 5%Financing percentage 80%Market capitalization rate 12%Cost of equity 15%Based on the income approach, the value of the investment is closest to: A. $1,141,667. B. $3,641,667. C. $6,242,857.