Sky High Partners is evaluating a high-rise office building to add to its investment portfolio. To calculate a value, Sky High plans to use the income approach, based on the following estimates: Compute the net operating income (NOI) for the building. Using the income approach, calculate the value for the office building.
Sky High Partners is evaluating a high-rise office building to add to its investment portfolio. To calculate a value, Sky High plans to use the income approach, based on the following estimates: Compute the net operating income (NOI) for the building. Using the income approach, calculate the value for the office building.
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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Sky High Partners is evaluating a high-rise office building to add to its investment portfolio. To calculate a value, Sky High plans to use the income approach, based on the following estimates:
- Compute the net operating income (NOI) for the building.
- Using the income approach, calculate the value for the office building.
Transcribed Image Text:Gross
potential
yearly rental
$894,000
income
Estimated
3.5%
vacancy rate
Yearly
operating
$426,000
costs
Market
capitalization
16%
rate
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