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30 year amortization period. This develops a mortgage constant of <br /> . 12348. <br /> To establish the return on equity investment, or cash flow, a <br /> 12% rate of return has been applied to the 25% ratio of equity in- <br /> vestment. By adding the mortgage requirement to the equity require- <br /> ment, a weighted average or "overall" rate is developed. <br /> INCOME APPROACH SUMMARY <br /> (Direct Capitalization) <br /> Gross Income: <br /> Mine Services Building-16 ,350 SF X $4 . 50 PSF = $ 73 ,575 <br /> Truck Terminal Building - 19 ,780 SF X $4 . 50 PSF = $ 89 ,010 <br /> Bus System Park - 91 ,908 SF X $ . 35 PSF = $ 32 ,168 <br /> Fenced Storage - 176 ,000 SF X $ . 15 PSF = $ 26 , 400 <br /> Gross Income Estimate $221 ,153 <br /> Less Vacancy and Collection Loss (7. 5%) $ 16 ,586 <br /> Effective Gross Income $204 ,567 <br /> Operating Expenses : <br /> Taxes $ 16 ,000 <br /> Insurance $ 3 , 850 <br /> Maintenance (20¢ PSF) $ 7 ,226 <br /> Management (5%) $ 10 ,228 <br /> Total Expenses $ 37 , 304 $ 37 ,304 (18%) <br /> Net Income to Real Estate $167 ,263 <br /> Capitalization: <br /> Capitalization Rate <br /> 1st Mortgage 75% X . 12348 = . 09261 <br /> Equity 25% X . 12 = . 03000 <br /> Overall Capitalization Rate . 12261 <br /> Valuation: <br /> $167 , 263 _ . 12261 = $1 ,364 ,187 <br /> Surplus Land Contribution $ 400 ,000 <br /> Total Indicated Real Estate Value $1 ,764 ,187 <br /> INCOME APPROACH <br /> (Mortgage-Equity) <br /> This application of the income approach is defined as the <br /> Ellwood method or Mortgage-Equity Analysis. In the belief that <br /> -15- <br />