What is the value of this office building

Assignment Help Accounting Basics
Reference no: EM132632989

Question - We just signed a lease contract in a 200,000 SF of?ce building complex for $25/ SF / year with rents paid in arrears (at the end of the year) annually. The rent will increase by 3% per year. The discount rate is 10% / year.

a. What is the value of this offce building, assuming that the building is sold at the end of year 10 and the cap rate at that time is expected to be 10%? What is the implied cap rate at time 0?

b. What is the value of this office building, assuming that the building is sold at the end of year 10 and the cap rate at that time is expected to be the same as today? What is the implied cap rate at time 0 and 10?

c. What is the value of this office building, assuming that the building will be held and rented inde?nitely (perpetually)? What is the implied cap rate at time 0?

d. What is the value if the rents are paid in advance (at the beginning of the year) and the building is rented perpetually?

Reference no: EM132632989

Questions Cloud

Component of the nervous system : You see a mosquito land on your hand and swat at it.
How important are facts in the process of forming an opinion : How important are facts in the process of forming an opinion? Explain what you believe to be the purpose or function of facts in making a judgment.
Type of species best describes a mouse : -Why do you think type 2 diabetes occurs so much more often than other inheritable diseases?
Report to managing directors of orthodontic clinic : Write a report for the managing director of the orthodontic clinic - overview of the expected results for the 2021 year including total sales
What is the value of this office building : What is the value of this office building, assuming that the building will be held and rented inde?nitely (perpetually)? What is the implied cap rate at time 0
Explain what effects do the new technologies : Explain What effects do the new technologies (e.g., smartphones, computers, tablets, social media) have on citizen participation?
Special education services for learning disability : Charlie is a fifth grader who receives special education services for a learning disability.
Explain some of the characteristics of new age spiritualty : Explore conflict between religion. Explain some of the characteristics of New Age spiritualty, and Explain the three traditional types of change in religion.
What is meant by the term contribution margin per unit : What is meant by the term contribution margin per unit of scarce resource? How is this concept used in making product mix decisions

Reviews

Write a Review

Accounting Basics Questions & Answers

  How much control does fed have over this longer real rate

Hubbard argues that the Fed can control the Fed funds rate, but the interest rate that is important for the economy is a longer-term real rate of interest.   How much control does the Fed have over this longer real rate?

  Coures:- fundamental accounting principles

Coures:- Fundamental Accounting Principles: - Explain the goals and uses of special journals.

  Accounting problems

Accounting problems,  Draw a detailed timeline incorporating the dividends, calculate    the exact Payback Period  b)   the discounted Payback Period. the IRR,  the NPV, the Profitability Index.

  Write a report on internal controls

Write a report on Internal Controls

  Prepare the bank reconciliation for company

Prepare the bank reconciliation for company.

  Cost-benefit analysis

Create a cost-benefit analysis to evaluate the project

  Theory of interest

Theory of Interest: NPV, IRR, Nominal and Real, Amortization, Sinking Fund, TWRR, DWRR

  Liquidity and profitability

Distinguish between liquidity and profitability.

  What is the expected risk premium on the portfolio

Your Corp, Inc. has a corporate tax rate of 35%. Please calculate their after tax cost of debt expressed as a percentage. Your Corp, Inc. has several outstanding bond issues all of which require semiannual interest payments.

  Simple interest and compound interest

Simple Interest, Compound interest, discount rate, force of interest, AV, PV

  Capm and venture capital

CAPM and Venture Capital

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