A commercial property generates an annual ground lease of $75,000, which reflects the current market rate. The site represents 40% of the total property value. The overall capitalization rate is 9%, and the building capitalization rate is 10%. Calculate the site value. Options: A) $625,000 B) $560,000 C) $675,000 D) $512,500
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What is the site value? General Accounting question
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- A commercial property has PGI of $5 million, expenses of 40% of EGI and the vacancy is underwritten at 10%. What values would the following parameters suggest for the property. 70% LTV with a rate of 4.5% and 360 month amortization schedule. Given a property value of $45 million, calculate PGIM, EGIM, Cap Rate, Cash on Cash return and DSSCR.Assume that a company is choosing between two alternatives-lease a piece of equipment for five years or buy a piece of equipment and sell it in five years. The costs associated with the two alternatives are summarized as follows: LeaseBuyPurchase cost of equipment $ 60,000Annual operating costs $ 6,000Immediate deposit$ 25,000 Annual lease payments$ 18,000 Salvage value (5 years from now) $ 8,000 If the company chooses the lease option, it will have to pay an immediate deposit of $25,000 to cover any future damages to the equipment. The deposit is refundable at the end of the lease term. The annual lease payments are made at the end of each year. Based on a net present value analysis with a discount rate of 24%, what is the financial advantage (disadvantage) of buying the equipment rather than leasing it? Multiple Choice $(8,687) S(4,877) $(7,857) S(7,367)Lara Technologies is considering a cash outlay of $210,000 for the purchase of land, which it could lease out for $39,200 per year. If alternative investments that yield a 17% return are available, the opportunity cost of the purchase of the land is a.$35,700 b.$74,900 c.$39,200 d.$3,500
- Lawrence Corp. is considering the purchase of a new piece of equipment. When discourtaed at a hurde rete l te project hant etw of $24,58O, When discounted at a hurdie rate of 10%, the project has a net present value of ($28340), The intemal rate of retum d te pis Multiple Choice zero. between zero and 8% between 8% and 10% greater than 10% Next> 18 of 20 # ( Prev lulook AirA project with a life of 5 has an initial fixed asset investment of $42,000, an initial NWC investment of $4,000, and an annual OCF of -$64,000. The fixed asset is fully depreciated over the life of the project and has no salvage value. If the required return is 13 percent, what is the project's equivalent annual cost, or EAC? Multiple Choice O O O о о $-53,786.35 $-76,461.21 $-80,284.27 $-64,992.03 $-72,638.15A manufacturer can lease a machine for 7 years at $3,000 per quarter, payable at the beginning of each quarter. Alternatively, they can purchase the machine for $78,000 and sell it for $8,700 in 7 years. The cost of capital is 6.2% compounded annually. a. What is the present value of the cost: (enter a positive value accurate to the nearest dollar) i) of the lease option? $ ii) of the purchase option? $ b. Should the manufacturer purchase or lease? O Purchase since Purchase PV is higher than Lease PV O Lease since Lease PV is higher than Purchase PV O Lease since Purchase PV is lower than Lease PV O Purchase since Lease PV is lower than Purchase PV Lease since Lease PV is lower than Purchase PV Purchase since Lease PV is higher than Purchase PV Submit Question
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- ASF wishes to acquire a 100,000 multifacet cutting machine the machine has a useful life of eight years, after which there is no expected salvage value. If ASF were to finance the cutting machine by signing an eight-year lease contract, annual lease payments of $16,000 would be required. The company could also finance the purchase of the machine with a 12 percent term loan having a payment schedule of the same general configuration as the lease payment schedule. The asset falls in the five-year property class for cost recovery (depreciation) purposes, and the company has a 35 percent tax rate. What is the present value of cash outflows for each of these alternatives, using the after-tax cost of debt as the discount rate? Which alternative is preferred?Mauer Mining Company leases a special drilling press with annual payments of $100,000. The contract calls for rent payments at the beginning of each year for a minimum of 6 years. Mauer Mining can buy a similar drill for $490,000, but it will need to borrow the funds at 10%. a. Determine the present value of the lease payments at 10%. b. Should Mauer Mining lease or buy this drill?An owner of the ATRIUM Tower Office Building is currently negotiating a five-year lease with ACME Consolidated Corporation for 20,000 rentable square feet of office space. ACME would like a base rent of $10 per square foot (PSF) with step-ups of $1 per year beginning one year from now. Required: a. What is the present value of cash flows to ATRIUM under the above lease terms? (Assume a 10% discount rate.) b. The owner of ATRIUM believes that base rent of $10 PSF in (a) is too low and wants to raise that amount to $14 with the same $1 step-ups. However, now ATRIUM would provide ACME a $52,800 moving allowance and $128,000 in tenant improvements (TIs). What would be the present value of this alternative to ATRIUM? c. ACME informs ATRIUM that it is willing to consider a $13 PSF with the $1 annual stepups. However, under this proposal, ACME would require ATRIUM to buyout the one year remaining on its existing lease in another building. That lease is $5 PSF for 20,000 SF per year. If…
