Commonly expect for the future

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Reference no: EM139141

Q. Assume as a "rule of thumb" one commonly assumes which the value of land equals the 14-fold of its annual rental income. Assume the current rent is also equal Illustrate one would commonly expect for the future.

(a) Illustrate what is the implicit discount rate for such a "rule of thumb?"

(b) Now assume the discount rate changes to 5.5%. Illustrate "rule of thumb" ratio between land value and annual rental income would you expect? Calculate.

Reference no: EM139141

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