Estimate is based on forecasted net rent

Assignment Help Financial Management
Reference no: EM13847234

A building is appraised at $1 million. This estimate is based on forecasted net rent of $100,000 per year discounted at a 10% cost of capital [PV = 100,000/ 0.1 = 1,000,000]. The rent is the net of repair and maintenance costs and taxes. Suppose the building is currently uninhabitable. It will take one year and $250,000 of work (spent at the end of the year) to bring it into rentable condition. How much would you be willing to pay for the building today? Explain your calculations. Respond to at least two of your classmates’ posts.   

Reference no: EM13847234

Questions Cloud

Case analysis:degree appraisals case study : Case Analysis: 360 Degree Appraisals Case Study
Interpret the results in one page memo to management : Image Storage Corporation has 1,000,000 shares outstanding. It wishes to issue 500,000 new shares using a (North American) rights issue. If the current stock price is $50 and the subscription price is $47/share, calculate the value of a right. Based ..
Who is proposing the legislation : Review new/pending 2014-2015 State or Local legislation for health care finance component to include: who is proposing the legislation and Whenwas it proposed/enacted
The efficient-market hypothesis : “If the efficient-market hypothesis is true, the pension fund manager might as well select a portfolio with a pin.” Explain why or why not this is true.
Estimate is based on forecasted net rent : A building is appraised at $1 million. This estimate is based on forecasted net rent of $100,000 per year discounted at a 10% cost of capital [PV = 100,000/ 0.1 = 1,000,000]. The rent is the net of repair and maintenance costs and taxes. How much wou..
How much should he set aside today for purchase : Fred plans to purchase a car four years from now. The car will cost $57,325 at that time. Assume that fred can earn 8.56 percent compounded monthly on his money. How much should he set aside today for the purchase?
Savings account today that earns an annual interest rate : You placed $3722 in a savings account today that earns an annual interest rate of 19.72 percent compounded semi annually. How much will you have in this account at the end of five years? Assume that all interest received at the end of the period is r..
What is value of the common stock-common stock valuation : (Common stock valuation) Gilliand Motor, Inc., paid a $4.39 dividend last year. If Gilliand’s return on equity is 19 percent, and its retention rate is 28 percent, what is the value of the common stock if the investors require a rate of return of 18 ..
Explain combination of ways to educate co-workers : What would be the best way or combination of ways to educate co-workers about the new business your (imaginary) company just acquired

Reviews

Write a Review

Financial Management Questions & Answers

  Expected return-Returns on the two stocks have correlation

Stocks A and B each have an expected return of 12%, a beta of 1.2, and a standard deviation of 25%. The returns on the two stocks have a correlation of +0.6. Portfolio P has 50% in Stock A and 50% in Stock B.

  What is the net present value of paying the points

A homeowner can obtain a $250,000, 30-year fixed-rate mortgage at a rate of 6.0 percent with zero points or at a rate of 5.5 percent with 2.25 points. If you will keep the mortgage for 30 years, what is the net present value of paying the points (to ..

  What is the cost of goods sold for the company

Saunders Corp. has current liabilities of $500,000, a quick ratio of 0.92, inventory turnover of 6.8, and a current ratio of 1.3. What is the cost of goods sold for the company?

  Dividend is expected to grow ata constant rate

Super carpeting Inc just paid a deidend (Do) of $3.12, and its dividend is expected to grow ata constant rate (g) of 6.5% per year. Supers expected stock price one year from today will be___?

  How much interest would pace have to pay

Pace Co. borrowed $12,000 at a rate of 7.25%, simple interest, with interest paid at the end of each month. The bank uses a 360-day year. How much interest would Pace have to pay in a 30-day month?

  Determine before tax-costs of debt financing of bond

Use the information below to determine before tax-costs of debt financing of bond S:

  Research current budgeting or cash flow issues occuring in

research current budgeting or cash flow issues occuring in todays environment. focus exclusively on the corporate

  Discuss the formation of financial statements

Discuss the formation of financial statements by introducing debit, credit, books of prime entry, accounts and ledgers, trial balance, final accounts and explain and compare appropriate formats of financial statements for difference forms of compa..

  Return-what is the probability that this stock

A stock had returns of 10 percent, 21 percent, and 8 percent for the past 3 years. Based on these returns, what is the probability that this stock will earn at least 20.00 percent in any one given year? Provide detailed calculations of Excel function..

  Cemetery project will provide net cash inflow

The Yurdone Corporation wants to set up a private cemetery business. According to the CFO, Barry M. Deep, business is "looking up". As a result, the cemetery project will provide net cash inflow of $104,000 for the firm during the first year, and the..

  Price and yield problem

An 6% semi-annual coupon bond matures in 5 years. The bond has a face value of $1,000 and a current yield of 6.8307%. What is the bond's price? Round your answer to the nearest cent.

  One area in which you are assisting is in the setup of

one area in which you are assisting is in the setup of business development in central and south america for navigation

Free Assignment Quote

Assured A++ Grade

Get guaranteed satisfaction & time on delivery in every assignment order you paid with us! We ensure premium quality solution document along with free turntin report!

All rights reserved! Copyrights ©2019-2020 ExpertsMind IT Educational Pvt Ltd