Question#1

What is the present worth of an income producing property which recei

Question#1

What is the present worth of an income producing property which receives a net operating income of $30,000 during year 1, $32,000 in year 2, $40,000 in year 3, and $43,000 in year 4? Assume the property is sold at the end of year 4 for $50,000 net of selling expenses and the discount rate is 15%.

Question#2

How many months does it take to amortize a loan with an outstanding balance of $200,000, monthly payments of $1,245, and an interest rate of 3%?

Question#3

A retail shopping center was purchased in 2016 for $2.1 million in cash. During the next four years the property appreciated at 4 percent per year. Annual depreciation allowance is $16,000 per year. At the end of year 4, the property is sold; selling expenses are 8 percent. What is the after-tax equity reversion for an investor with an income tax rate of 28 percent, a capital gains tax rate of 20 percent and a deprecation recapture of tax rate of 25 percent?

Question#4

An office building situated on a 1-acre parcel of land has an expected gross income of $106,000 per year with a vacancy rate of 7.5 percent. What is the value of the property and improvements assuming a gross income multiplier of 6.5? If the land area is worth $45,000 what is the value of the building?

Question#5

The owner of a financially distressed property in Texas can dispose of it at a $2 million loss today. If the period of recovery for the project is expected to be three years, with annual before tax carrying costs of $1,000,000, $800,000 and $600,000 respectively, should the property be sold? Assume that the market value of the property immediately before the downturn in the Texas market was $10,000,000. Today the market value of the property is estimated to be $8,000,000. In three years, the market value of the property is expected to again be $10,000,000. The appropriate discount rate is 15%. Selling expenses are assumed to be zero. Should the property be sold if the discount rate is now 20%?