Finance-explicit model-what is the value of this property

Assignment Help Financial Management

Reference no: EM13762757

An office property with 60,000 square feet of rentable space is expected to rent for $40 per square foot in the coming year. Rent is expected to decline 3 percent per year over a projected holding period of seven years. Vacancy will be at 7.5 percent, and the operating expense ratio (based on effective gross income) will be at 35 percent. The property is expected to appreciate at the rate of 2 percent per year. It will be financed using 75 percent debt at an interest rate of 8 percent, amortized over 15 years with monthly payments. Equity investors expect an 15 percent before tax yield. What is the value of this property? HINT: Use the Finance-Explicit Model.?

Reference no: EM13762757

Questions Cloud

Technical concepts of nanotechnology : Analyze the advantages and disadvantages of each car's technology, price, manufacturing, and impact on environment.

What is the definition of religion : What is the definition of religion? What are common practices and experiences across various world religions? Include indigenous religions in your discussion.

Value the property using ellwood : An apartment is expected to produce $105,000 NOI the first year, increasing by 3 percent per year each year over a projected 7 year holding period. A 70 percent loan-to-value ratio is typical. Current terms are 7.5 percent interest for 25 years (annu..

Write a java program to prompts a user to enter information : Write a Java program prompts a user to enter demographic information

Finance-explicit model-what is the value of this property : An office property with 60,000 square feet of rentable space is expected to rent for $40 per square foot in the coming year. Rent is expected to decline 3 percent per year over a projected holding period of seven years. Vacancy will be at 7.5 percent..

How can the brain repair itself or restore lost function : How can the brain repair itself or restore lost function after TBI or other brain damage (focus on the concept of neuroplasticity)?

Determine fundamental business advantages of e-business : Determine the fundamental business advantages and disadvantages of e-business and e-commerce across the business organization.

What is the expected return of the portfolio : Consider the following information: Rate of Return If State Occurs State of Probability of Economy State of Economy Stock A Stock B Stock C Boom .17 .358 .458 .338 Good .43 .128 .108 .178 Poor .33 .018 .028 ?.062 Bust .07 ?.118 ?.258 ?.098 Requiremen..

Systems analysis and design : What are the benefits of a thorough system requirements document? Drawbacks? How can a system requirements document be used to manage stakeholder expectations?

User Account

All Pages