A condominium unit in Toronto has a net lease of $1,100 payable at the beginning of each month for the first 10 years, and $1,400 per month payable in advance for the next 5 years, which is the balance of the term. The property will have an anticipated value of $550,000 upon expiration of the lease. A survey shows that, the current average rent for comparables is $1,200 per month for the first 10 years and $1,300 for the next 5 years. 15. Calculate the present value of the lease based on an expected rate of return of j,, - 5%. Round your answer to the nearest $100. (1) $432,100 (2) $477,400 (3) $409,600 (4) $412,300 16. Calculate the value of the tenant's interest based upon a return of j,, - 8%. Round your answer to the nearest $100. (1) $6,100

A condominium unit in Toronto has a net lease of $1,100 payable at the beginning of each month for the first 10 years, and $1,400 per month payable in advance for the next 5 years, which is the balance of the term. The property will have an anticipated value of $550,000 upon expiration of the lease. A survey shows that, the current average rent for comparables is $1,200 per month for the first 10 years and $1,300 for the next 5 years. 15. Calculate the present value of the lease based on an expected rate of return of j,, - 5%. Round your answer to the nearest $100. (1) $432,100 (2) $477,400 (3) $409,600 (4) $412,300 16. Calculate the value of the tenant's interest based upon a return of j,, - 8%. Round your answer to the nearest $100. (1) $6,100

Essentials Of Investments

11th Edition

ISBN:9781260013924

Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.

Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.

Chapter1: Investments: Background And Issues

Section: Chapter Questions

Problem 1PS

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Dell Canada advertises a computer bundle including printer, router and home network attached storage for $2995. The same system bundle may be leased for 24 months at $130 per month, at the beginning of each month. At the end of the lease, the bundle may be purchased for 10% of its retail price. What is the economic cost of the lease or purchase in present value, if a two year loan can be obtained at 12% compounded annually to purchase the computer? a Lease is better by $48.64 b Purchase is better by $48.64 c Lease is better by $109.38 d Purchase is better by $109.38 e Both options are the same.
A property owner is evaluating the following alternatives for leasing space in his office building for the next five years: Gross lease. Rent will be $34 per square foot each year with the lessor responsible for payment of all operating expenses. Expenses are estimated to be $9 during the first year and increase by $1 per year thereafter. Calculate the effective rent to the owner (after expenses) for the lease using a 11 percent discount rate. (Click to select) (Click to select) $29.01 $18.57 $23.21 $22.05
Bisa is leasing a vehicle worth $20,000, with a down payment of $1000 and equal payments at the beginning of every two weeks for three years. What is the size of each lease payment if the cost of borrowing is 6.75% compounded monthly and the residual value is $10,500? The Textbook answer says $147.34........
A lease valued at $18,000 requires payments of $1,813 at the beginning of every month. If money is worth 6% compounded monthly, what is the size of the final lease payment? The size of the final payment is $. (Round the final answer to the nearest cent as needed. Round all intermediate values to six decimal places as needed.)
Assume an apartment has a floor area of 3,000 SF. The existing rent per month is $3,000. The market level rent is $15,000 per month. Assume that the tenant is willing to enter into a voluntary vacate agreement to be bought out of his lease and that you are now negotiating a buy out price. The apartment requires an additional $200,000 in renovation to get it up to market standards. If a prevailing cap rate for this apartment is 4.0%, at what buy out price is the incremental value created by the landlord for this unit after renovations equal to zero? O $3,40,000 O $2,350,000 O $1,000,000 O $3,100,000
A real estate broker decides to lease a car for 36 months. Suppose the annual interest rate is 7.8%, the negotiated price is $48,000, there is no trade-in, and the down payment is $3,000. Find the monthly lease payment (in dollars). Assume that the residual value is 48% of the MSRP of $51,800.
A small retail center has 1,475 square foot for rent. It has a current lease ending in two years with a contract rent of $11 per year per square foot. At the end of year 2, the investor expects to resell the property at a terminal capitalization rate of 10%. The sales cost is 5% of the resale price. The rent for year 3 is projected at the market rent level of $18 per year per square foot, and the NOI grows at a rate of 2% beyond year 3. The collection cost is .5% of the potential gross income. The capitalization rate for the net cash flow is 11%, and all cash flows happen at the end of each year. Expenses include taxes, maintenance, management, and replacement allowance. Taxes for the first year are $7,500 and increase by $700 per year. Maintenance is $2,212 for the first year and increases by $200 per year. Management is 5% of effective gross income. Replacement allowance happens at the beginning of the first year and is $112,000. Potential gross income is the revenue from rents.…
Sheridan Company enters into a lease agreement with Sunland Inc. to lease office space for a term of 72 months. Lease payments during the first year are $6,800 per month. Each year thereafter, the lease payments increase by an amount equivalent to the percentage increase in the Consumer Price Index (CPI). For example, if the CPI increases 2% in the second year, the monthly payment increases to $6,936. In the second year, the CPI increases by 3%. What are the lease payment amounts used to record this lease in the second year? Lease payment $ 84,048
A contract has been signed to lease a building at P21.483 per year with an annual increase of P1,045 for 10 years Payments are to be made at the end of each year, starting one year from now. The prevailing interest rate is 8.78%.What lump sum paid today would be equivalent to the 10-year lease -payment plan?
A lease valued at $40,000 requires payments of $5000 every three months. If the first payment is due three years after the lease was signed and interest is 10% compounded quarterly, what is the term of the lease? The term of the lease is quarters. (Round up to the nearest quarter.)
Red Sun Rising Corporation has just signed a lease for its new manufacturing facility. The lease agreement calls for annual payments of $1,850,000 for 20 years with the first payment due today. If the interest rate is 3.55 percent, what is the value of this liability today?

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