A shop is held on lease for an unexpited term of 10 years without rent review at a rent of RM75,000 per annum. The current rental calue is RM95,000 on the same terms. The appropriate freehold yield is 6.5%. Interest rate onsafe long term investments are in the region of 2.5%, and the tax is 30%. Value the leasehold interest.

A shop is held on lease for an unexpited term of 10 years without rent review at a rent of RM75,000 per annum. The current rental calue is RM95,000 on the same terms. The appropriate freehold yield is 6.5%. Interest rate onsafe long term investments are in the region of 2.5%, and the tax is 30%. Value the leasehold interest.

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

See similar textbooks

Similar questions

The annual debt service on a property is $25,000 and the pre-tax cash flow is $50,000. If the mortgage capitalization rate is 8.5% and the overall rate is 10%, what is the indicated value of the property?
Assume a $900,000 property is purchased with a 70% loan to value ratio. The mortgage is written at j1 = 6%, with annual payment over a 15-year amortization, period. The annual NÓI of the property is $75,000. What is the before tax equity return of this investment а. 7.5% b. 4.65% с. 5.32% d. 3.75%
A mortgage for $200,000 with interest rate of 7.20%, fixed monthly payments, and term of 30 years was originated 10 years ago. If the loan's current balance is refinanced for the rest of the original term of at the rate of 6.30% with monthly payments, what is the implied annual savings rate given that the existing loan has a refinancing fee of 4% of the remaining balance at the time of refinancing and that loan is expected to be outstanding for 9 years? Selected Answer: Below 6% O A. Correct Answer: Е. Between 12% and 14%
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.…
XYZ Builders Ltd. need to acquire the use of a crane for their construction business and are considering buying or leasing a crane. The crane costs Rs.1000 subject to SLM depreciation with salvage value 0 at the end of 5 years. In contrast, the lease rent is Rs.3000 p.a. to be paid in advance each year for 5 years.XYZ Builders ltd can raise debt at 20% payable in equal annual instalments, each instalment due at the beginning of the year. Tax applicable in 35%. Should it lease or buy the asset?
After two years in business, the owners have saved (have a surplus of) $123,750.00. They must decide if they will invest in property or investment bonds. If they invest in a property and a vehicle, the total cost will be $445,500,00, of which $123,750.00 will be required as a down payment. The fixed interest rate on the mortgaged amount is 5.40% compounded semi-annually for a term of 13 years. 5. What is the size of the semi-annual payments required to settle this mortgage? 6. What is the size of the final payment? 7. How long would it take (in months) to settle this loan with regular monthly payments of exactly $2000 instead of the PMT value calculated in Part 5?
A vehicle can be purchased by paying $18,000 now, or it can be leased by paying $515 per month for the next three years, with the first payment due on the day of signing the lease. What nominal annual rate of interest compounded monthly is charged on the lease?
What is the effective yield to the lender through the date of prepayment on a $540,000 fixed rate mortgage loan fully amortizing over 30 years but paid off after 10 years if the stated annual interest rate is 6.50%, the lender charges 2.0% as an origination fee, $720 for an appraisal and $36 for a credit report and there is no prepayment penalty? -6.81% -6.71% -6.30% -6.50%
Four-year lease agreement requires payments of P10000 at the beginning of everyyear. If the interest rate is 6% compounded monthly, what is the cash value of thelease?
Compute the interest paid on a 4-year lease for a $26, 498 car if the annual rate of depreciation is 17% and the lease's annual interest rate is 5.1%.

Recommended textbooks for you

Essentials Of Investments

Finance

ISBN:

9781260013924

Author:

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

Publisher:

Mcgraw-hill Education,

FUNDAMENTALS OF CORPORATE FINANCE

Finance

ISBN:

9781260013962

Author:

BREALEY

Publisher:

RENT MCG

Financial Management: Theory & Practice

Finance

ISBN:

9781337909730

Author:

Brigham

Publisher:

Cengage

Foundations Of Finance

Finance

ISBN:

9780134897264

Author:

KEOWN, Arthur J., Martin, John D., PETTY, J. William

Publisher:

Pearson,

Fundamentals of Financial Management (MindTap Cou…

Finance

ISBN:

9781337395250

Author:

Eugene F. Brigham, Joel F. Houston

Publisher:

Cengage Learning

Corporate Finance (The Mcgraw-hill/Irwin Series i…

Finance

ISBN:

9780077861759

Author:

Stephen A. Ross Franco Modigliani Professor of Financial Economics Professor, Randolph W Westerfield Robert R. Dockson Deans Chair in Bus. Admin., Jeffrey Jaffe, Bradford D Jordan Professor

Publisher:

McGraw-Hill Education

Essentials Of Investments

Finance

ISBN:

9781260013924

Author:

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

Publisher:

Mcgraw-hill Education,

FUNDAMENTALS OF CORPORATE FINANCE

Finance

ISBN:

9781260013962

Author:

BREALEY

Publisher:

RENT MCG

Financial Management: Theory & Practice

Finance

ISBN:

9781337909730

Author:

Brigham

Publisher:

Cengage

Foundations Of Finance

Finance

ISBN:

9780134897264

Author:

KEOWN, Arthur J., Martin, John D., PETTY, J. William

Publisher:

Pearson,

Fundamentals of Financial Management (MindTap Cou…

Finance

ISBN:

9781337395250

Author:

Eugene F. Brigham, Joel F. Houston

Publisher:

Cengage Learning

Corporate Finance (The Mcgraw-hill/Irwin Series i…

Finance

ISBN:

9780077861759

Author:

Stephen A. Ross Franco Modigliani Professor of Financial Economics Professor, Randolph W Westerfield Robert R. Dockson Deans Chair in Bus. Admin., Jeffrey Jaffe, Bradford D Jordan Professor

Publisher:

McGraw-Hill Education

SEE MORE TEXTBOOKS