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
Levart [38]
3 years ago
11

Consider an investment in which a developer plans to begin construction, of a building that will cost $1,000,000, in one year if

, at that point, rent levels make construction feasible. There is a 50 percent chance that NOI will be $160,000 and a 50 percent chance that NOI will be $80,000. Assuming a cap rate of 10 percent (12 percent discount rate and an NOI growth rate of 2 percent) what would the land value be at the completion of the construction, under the real options approach
Business
1 answer:
NeTakaya3 years ago
6 0

Answer:

$300,000

Explanation:

Calculation to determine what would the land value be at the completion of the construction, under the real options approach

First step is to calculate the property worth

If NOI =$160,000

Capitalization rate = 10%

Property will worth =$160,000/10%

Property will worth =$1,600,000

Land value = $1,600,000 - $1,000,000 = $600,000

Second step is to calculate the property worth $

If NOI =$80,000

Capitalization rate = 10%

Property worth=$80,000/10%

Property worth =$800,000

Land value of $800,000 will be 0 reaosn been that the property cost is lower than the construction cost Base

Now let calculate the land value

Land value = 50%($600,000) + 50% ($0)

Land value = $300,000

Therefore what would the land value be at the completion of the construction, under the real options approach is $300,000

You might be interested in
Adonis Corporation issued 10-year, 11% bonds with a par value of $270,000. Interest is paid semiannually. The market rate on the
shutvik [7]

Answer:

e) Adonis must pay $270,000 at maturity plus 20 interest payments of $14,850 each.

Explanation:

Based on this information,Adonis Corporation is issuing a coupon paying bond.

  • The $286,827 that they receive is the market price/ market value of the bond.
  • The duration of the bond = 10 years, however, since the coupons are paid semiannually, there will be 10*2 = 20 payments in total.
  • Semi annual coupon payment; PMT = (11%/2) *270,000 = $14,850
  • The $270,000 is the face value of the bond which must be repaid at the end of the life of this bond.
  • <em>Therefore, Adonis must pay $270,000 at maturity plus 20 interest payments of $14,850 each.</em>
3 0
3 years ago
choose a real or made-up example of a company, and describe at least three variable costs the company has. (1-3 sentences.
Solnce55 [7]
For a restaurant, some variable costs could be labor costs/ worker wages, raw product/ purchasing food to cook, and energy and fuel/ utilities.
7 0
3 years ago
INVESTOR Corp. was interested in investing in bonds and, on 01/01/2012 purchased 8% bonds dated January 1, 2012. These bonds had
seropon [69]

Answer

The answer and procedures of the exercise are attached in the following archives.

Step-by-step explanation:

You will find the procedures, formulas or necessary explanations in the archive attached below. If you have any question ask and I will aclare your doubts kindly.  

5 0
3 years ago
As environmental conditions change what occurs
Ugo [173]

Changes in the environment can lead to shortages of food due to no rain to water the plants for herbivores.
species that are used to favourable conditions will die due to environmental unfavourable conditions.
3 0
3 years ago
The four underlying assumptions of generally accepted accounting principles are economic entity, monetary unit, periodicity, and
DerKrebs [107]

Answer:

1. Going concern

2. Economic entity

3. Monetary unit

4. Periodicitys

Explanation:

1. Since Jumbo's Restaurant is planning to close, the assumption of continuity (going concern) is no more applicable. This should be disclosed. Instead asset was still recorded at historical price which is misleading.

2. Gorloks Tax Services is an economic entity, and the property and assets of owners are not considered to be for the business. In this case the boat Sam bought was wrongly reported as an asset of the company.

3. Claim Jumpers when reporting the 5 trucks purchased must include a monetary value for them. The assumption of monetary unit states that all items reported on the balance sheet must be expressed in monetary terms.

4. Cobbler's Etc violated the assumption of periodicity which states the financial position of the business must be declared in a particular accounting period. Accounting period can monthly, quarterly, biannually, and yearly. The business should choose and accounting period and ensure financial position is reported for each of them. In this case financial reporting is not consistent with reporting happening after 14 months and before that 18 months.

6 0
3 years ago
Other questions:
  • Ron operates a garbage pickup business. he contracts to pick up garbage from an apartment complex for the next 52 weeks at a pri
    12·2 answers
  • The natural rate of unemployment is the: Question 10 options: a) full-employment unemployment rate. b) unemployment rate experie
    10·1 answer
  • In 2013, the Bureau of Labor Statistics (BLS) announced that of all adult Americans, 143,929,000 were employed, 11,460,000 were
    15·1 answer
  • Crandle Manufacturers Inc. is approached by a potential customer to fulfill a oneminustimeminusonly special order for a product
    7·1 answer
  • Kinnamont Company manufactures farming equipment that includes navigational systems as part of the standard equipment package an
    15·1 answer
  • Which decision-making models best describe how decision-making takes place in the research and development laboratory of a major
    7·1 answer
  • Kathleen is a member of the human resource department at Jade Corp. Setting a goal to enhance the firm's strategy, Kathleen work
    10·1 answer
  • Heavenly Pastries, Inc. Heavenly Pastries, Inc. was founded in 1998 by Gary Houser in Boston, Massachusetts. Over the years, Hea
    12·1 answer
  • Who hates me? be honest
    13·2 answers
  • Charlie is a manager who, every week, has to review and approve reports, monitor the performance of subordinates, set the vision
    8·1 answer
Add answer
Login
Not registered? Fast signup
Signup
Login Signup
Ask question!