Suppose the building is currently uninhabitable it will


A building is appraised at $1 million. This estimate is based on forecasted net rent of $100,000 per year discounted at a 10% cost of capital [PV = 100,000/ 0.1 = 1,000,000]. The rent is the net of repair and maintenance costs and taxes. Suppose the building is currently uninhabitable. It will take one year and $250,000 of work (spent at the end of the year) to bring it into rentable condition. How much would you be willing to pay for the building today?

Solution Preview :

Prepared by a verified Expert
Finance Basics: Suppose the building is currently uninhabitable it will
Reference No:- TGS0610451

Now Priced at $10 (50% Discount)

Recommended (99%)

Rated (4.3/5)