Find the jefferson estimated value for the building

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Question - Tristan Jefferson, CFA, is trying to estimate the value of an office building with potential rental income of €900,000 annually. He has found a comparable property with NOI of €84,500 that recently sold for €1,056,250. Jefferson uses 2% of gross operating income as the vacancy and collection loss rate. Other estimated operating costs for the potential acquisition are:

Insurance: €12,500

Taxes: €31,000

Utilities: €26,000

Repairs and maintenance: €24,500

Depreciation: €16,000

Jefferson also determined that the comparable building is 50% financed at 6%.

Find the Jefferson's estimated value for the building?

Reference no: EM132797771

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