What is the present value

Assignment Help Finance Basics
Reference no: EM133275989

A 100,000-SF space is expected to rent in five-year fixed-rent leases successively in perpetuity (annual payments at the beginning of the years). You expect the first lease will be signed one year from now, with the first rent payment to be received at that time. The second lease will begin five years after that, and so on. The rent in each lease is constant, but between new lease signings the rent is expected to grow at a rate of 2% per year. The rent on the first lease is expected to be $20/SF per year. The intralease discount rate is 8% per year. However, prior to the signing of each lease, the amount of the rent for that lease is uncertain and risky, so a 12% rate is appropriate for discounting lease values back to present value prior to lease signings. What is the present value of this 100,000-SF space?

Reference no: EM133275989

Questions Cloud

Keirsey Temperament Sorter : What did you learn about yourself? How would this assessment be useful in your own professional development in the military working in HR?
Define biomedicine and provide an example : How would you make a case for, "the need for collaboration, acceptance, and partnership between all systems of care in cultural communities
What does the specific factors model predict : In general, what does the specific factors model predict about which factors will favor free trade, and which factors will oppose free trade
Which risk factors are most likely to contribute : Walden University NURS Which risk factors are most likely to contribute to a person developing tardive dyskinesia (TD)? a, long term use of antipsychotics. b
What is the present value : A 100,000-SF space is expected to rent in five-year fixed-rent leases successively in perpetuity (annual payments at the beginning of the years). You expect the
Performance management process : Why is employee participation in the performance management process important. Assume you are a manager in a low-budget healthcare setting/system.
Describe some of the ways impulsivity is measured : Describe some of the ways impulsivity is measured in the laboratory, and discuss some of the evidence that the striatum has a role in impulsivity
Risk of material misstatement in the financial statements : From an auditor's perspective, what are your primary concerns about the risk of material misstatement in the financial statements of Best Buy relating to COVID_
Draw your own production possibilities frontier : Draw your own Production Possibilities Frontier and tell what an efficient outcome looks like on the graph

Reviews

Write a Review

Finance Basics Questions & Answers

  Calculate the value of bonds

The company needs to open five stores, and to finance this by analyzing whether to use actions or bonds.

  Calculate the present discounted value

Calculate the present discounted value (PDV) for a 5 years bond with RM60,000 initial payment and yearly payment stream of RM3,500.

  Total market capitalization of the firm

Agilex Bio-Imports will pay an annual dividend of $2.5 per share and an extra dividend of $0.35 per share at the end of this month. The company's stock is curre

  Compute the geometric return

As a financial advisor, you are asked to advise your Singaporean clients to invest in 3 Exchange Trade Funds (ETF):

  Yield on commercial paper

A business intends to use 90-day bank-accepted bill futures to hedge the interest rate risk resulting from its plans to borrow approximately $5 million using th

  Compute the range of price of fb

Assume the risk-free rate is 3% and will remain so for all time. Face- book (FB) currently trades at $120. You purchase a 1-year European $5-strike call options

  Should the firm initiate the lockbox system

Assume that the firm could earn 10% on marketable securities and that there are 260 working days and hence 260 transfer from each lockbox location per year.

  How much will each annual payment be

You need to accumulate $79,520 for your son's education. You have decided to place equal year-end deposits in a savings account for the next 16 years. The savings account pays 4.42 percent per year, compounded annually. How much will each annual ..

  Large corporation acquired and placed in service the

large corporation acquired and placed in service the following 100 business-use assets. large did not elect sec. 179

  Analysis of return on investment

60 percent of receivables are not collected on time. The bills for those receivables must be reworked by the patient billing department and resubmitted to insurance companies for pay.

  Calculate annual return

Calculate annual return should be to achieve a net present value of $ 100,000 with an initial payment of $500,000 and the same annual return

  Calculate the average collection period

Essence of Skunk Fragrances, Ltd., sells 8,700 units of its perfume collection each year at a price per unit of $730. All sales are on credit with terms of 2/15, net 60. The discount is taken by 80 percent of the customers. Calculate the average c..

Free Assignment Quote

Assured A++ Grade

Get guaranteed satisfaction & time on delivery in every assignment order you paid with us! We ensure premium quality solution document along with free turntin report!

All rights reserved! Copyrights ©2019-2020 ExpertsMind IT Educational Pvt Ltd