Which is the value of land and building using capitalization

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Problem

Life Properties Co. owns land and a building with the following details: Annual rental revenue for the building is $225,000. Annual costs to operate the building include: o Management fees: $24,000 o Repairs and maintenance: $20,000 o Utilities: $3,000 o Property taxes: $11,000 Vacancies and bad debts are expected to be 4% of gross rental revenue. The income tax rate is 25%. Annual depreciation on the building is $55,000. Get the instant assignment help. The appropriate pre-tax capitalization rate is 8%. Which is the value of the land and building using the capitalization of net operating income approach?

Reference no: EM133901433

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