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gavmur [86]
3 years ago
13

A small apartment property is estimated to have potential gross income of $ 25,000. Vacancy and collection losses are expected t

o average 5 percent over the life of the property. Operating expenses are expected to average about 30 percent of effective gross income. An overall capitalization rate of 12 percent is derived from market transactions of similar properties. What is the market value?
Business
1 answer:
Bezzdna [24]3 years ago
7 0

Answer:

the market value of the property would be $138,542.

Explanation:

To calculate the market value of the property , we need to divide the net operating income by the capitalization rate, in the question we have been given the capitalization rate but the operating income is not available to us. So with the help of given potential gross income we will calculate the effective gross income and then from it we will calculate the net operating income, lets see how to do step wise calculation -

POTENTIAL GROSS INCOME - $25,000

(-) VACANCY AND COLLECTION LOSSES = 5% X $25,000

                                                                       = $1250

EFFECTIVE GROSS INCOME  = $23,750

Now from this we will subtract the operating expenses to get net operating income -

EFFECTIVE GROSS INCOME = $23,750

(-) OPERATING EXPENSES  = 30% X $23,750

                                              = $7125

NET OPERATING INCOME = $16,625

Now for calculating market value putting these value sin the formula -

NET OPERATING INCOME / MARKET CAPITALIZATION RATE

= $16,625 / 12%

= $138,541.66

= $138,542 ( APPROXIMATELY )

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3 years ago
Coca-Cola, Inc. and PepsiCo, Inc. have only one distributor each in the Phoenix area. The Phoenix market is an intensely competi
yaroslaw [1]

Answer:

B. The denial is justifiable given the level of interbrand competition.

Explanation:

Anti trust law only applicable if you can proof that two or more producers in the same industry work together in order to assert their control over the market. They can do this through price fixing, controlling the amount of supply, etc.

This condition<em> can't be found</em> in the scenario above.

The denial that done by PepsiCo is justifiable because in a really competitive market, a company need to impose a strict requirement on which entities they should form a dealership relation with. If PepsiCo choose the wrong dealers, Its competitors could easily taken over the market and resulted in a huge amount of loss for the company.

7 0
3 years ago
Which type of private label brand carries no evidence of a retailer s affiliation, is manufactured by a third party, and is sold
Drupady [299]

Answer:

A. A captive brand

Explanation:

-A captive brand is when a brand is produced by another party and owned by the retailer but there is no evidence of this and it is only sold by it.

-A complementary brand is when a brand is marketed together with another one to encourage the purchase of both.

-A cooperative brand is when a brand shares a promotion with another one.

-An exclusive brand is a brand that is produced by the retailer and it is sold using its name.

-A generic brand is when a product doesn't have a brand name and it has a lower price than the ones from well-known brands.

According to this, the answer is that the type of private label brand that carries no evidence of a retailer s affiliation, is manufactured by a third party, and is sold exclusively at the retailer is a captive brand.

8 0
3 years ago
Baylor Bank believes the New Zealand dollar will appreciate over the next five days from $.48 to $.50. The following annual inte
Nitella [24]

Answer:

Its dollar profit from speculation over the five-day period will be <u>$208,035.93</u>.

Explanation:

This can be determined as follows:

Assuming Baylor Bank borrow $5,000,000

The borrowing will be converted to New Zealand dollar at the current exchange rate and we will have:

Conversion = $5,000,000 / 0.48 = NZ$10,416,667

The NZ$10,416,667 shall be invested at an annualized based on  New Zealand lending rate of 6.75% over five days. This will produce future value (FV) as follows:

FV of investment = Amount invested * (1 + NZ lending rate)^(5 years / 360 days) = NZ$10,416,667 * (1 + 6.75%)^(5 / 360) = NZ$10,426,121.44

Converting the NZ$10,426,121.44 to dollar at the new rate of $.50 as follows:

New conversion = NZ$10,426,121.44 * $.05 = $5,213,060.72

Amount to repay based on the US borrowing rate = Amount borrowed in USD * (1 + US borrowing rate)^(5 years / 360 days) = $5,000,000 * (1 + 7.5%)^(5 / 360) = $5,000,000 * 1.00100495826555 = $5,005,024.79

Profit = New conversion - Amount to repay = $5,213,060.72 - $5,005,024.79 = $208,035.93

Therefore, its dollar profit from speculation over the five-day period will be <u>$208,035.93</u>.

3 0
3 years ago
On July 1, Shady Creek Resort borrowed $350,000 cash by signing a 10-year, 8.5% installment note requiring equal payments each J
egoroff_w [7]

Answer:

$29,750

Explanation:

Given that

Borrowed amount = $350,000

Interest rate = 8.5%

The computation of interest expense is shown below:-

Interest expense in the first annual payment = Borrowed amount × Interest rate

= $350,000 × 8.5%

= $29,750

Therefore, for computing the interest expense in the first annual payment we simply multiply borrowed amount with interest rate.

7 0
3 years ago
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