1answer.
Ask question
Login Signup
Ask question
All categories
  • English
  • Mathematics
  • Social Studies
  • Business
  • History
  • Health
  • Geography
  • Biology
  • Physics
  • Chemistry
  • Computers and Technology
  • Arts
  • World Languages
  • Spanish
  • French
  • German
  • Advanced Placement (AP)
  • SAT
  • Medicine
  • Law
  • Engineering
Alina [70]
2 years ago
9

A property that produces a first year NOI of $80,000 is purchased for $750,000. The NOI is expected stay constant through year 5

, and to increase by 15% in the sixth year when some of the leases turn over. The NOI would then stay constant in years 6-10. The resale price in year 10 is expected to be $830,000. What is the net present value of investing in this property based on the 10-year holding period and a required return of 9.5%
Business
1 answer:
PIT_PIT [208]2 years ago
4 0

Answer: $115998

Explanation:

Based on the information given, we can calculate the NOI from the 6th year which will be:

= $80,000 × (100% + 15%)

= $80,000 × 115%

= $80,000 × 1.15

= $92,000

Therefore, the net present value of the property based on the 10-year holding period and a discount rate of 9.5% will be:

= 80000(PVAF, 5 year) + 92000[PVAF,(10-5),9.5%] + 830000/(1.095)10-750000

= (80000 × 3.839) + (92000 × 2.439) + (830000 × 0.403) - 750000

= 307120 + 224388 + 334490 - 750000

= 865998 - 750000

= $115998

Therefore, the net present value is $115998

You might be interested in
The most recent financial statements for Schenkel Co. are shown here: Income Statement Balance Sheet Sales $ 14,500 Current asse
Katena32 [7]

Answer:

0.1046 or 10.46%

Explanation:

The computation of the sustainable growth rate is shown below:

The Sustainable growth rate of the firm is

= Return on Equity × ( 1 - Dividend Payout Ratio )

where,

Dividend Payout Ratio = 30%

And,

Return on equity is

= Net Income ÷ Shareholder 's equity

= $3660 ÷ $ 24,500

= 0.14938

So,  

Sustainable growth rate is

= 0.14938 × (1 - 30%)

= 0.1046 or 10.46%

8 0
3 years ago
Which of the following is true of public goods? Question 9 options: a) The market mechanism helps to signal the quantity that is
murzikaleks [220]

Answer:

c

Explanation:

A public good is a good that is non excludable and non rivalrous.

For example, if there is a statue in a park, Everyone has assess to the statue and because one person is enjoying the view of the statue does not means another person cannot enjoy the view of the statue

3 0
2 years ago
CDs are similar to savings accounts because of which of the following?
Arturiano [62]

Answer:

b

Explanation:

3 0
2 years ago
Which expense category will most likely be changed to allow money for the purchase of a car?
Ivan
<h2>Reducing the "Entertainment " will hold good for the given scenario</h2>

Explanation:

There things which a man needs like food, water, shelter, etc.

Savings : This aspect is necessary for helping us in crucial point. It can serve as an another hand on demand.

Groceries : This is most important component of every men and women for living. So it cannot be reduced.

Utilities : This is equally important.

Entertainment : This shows luxurious aspect and not a mandatory one. So the amount spent in this category should be reduced.

7 0
3 years ago
Company A hired Nick as an agent and gave him a letter authorizing him to make purchases on behalf of the company. In a separate
Marizza181 [45]

Answer:

C. Company A is not bound by the contract because of illegality

5 0
3 years ago
Other questions:
  • The Gingham Company's budgeted income statement reflects the following amounts:
    10·1 answer
  • Curling is a sport where teams slide stones on ice and attempt to hit targets. Teams consist of four players. Suppose that Bob,
    6·1 answer
  • Under normal conditions (75% probability), financing plan a will produce $25,000 higher return than plan
    9·1 answer
  • To find all mentions of your competitor's branded hashtag within a given radius of a store you've opened up in a new city, you s
    14·1 answer
  • What is an example of a problem in the world today, not mentioned in the chapter, that has an economic dimension?
    5·1 answer
  • Elaine was known for being especially frugal. In fact, it was not out of the question for her to commute nearly 45 minutes just
    15·1 answer
  • A yearly statement of the financial condition, progress, and expectations of an organization
    15·2 answers
  • Which one of the following is not covered by renter's insurance? additional living expenses accidental damage to the property of
    8·1 answer
  • Bloomfield Bakers accounts for its investment in Clor Confectionary under the equity method. Bloomfield carried the Clor investm
    9·1 answer
  • prepare the journal entry to record double declining balance depreciation expense for the forklify for year 2
    8·1 answer
Add answer
Login
Not registered? Fast signup
Signup
Login Signup
Ask question!