1. Assume expenses are 40% of revenue. If we trend Revenue growth at 3% per year for 5 YEARS, AND expenses GROW at 2.5% per year for 5 years, how much higher is the Net Operating Income in Year 5 vs Year 1 (shown as a %) 2. In the scenario described above, if over the five-year period cap rates have contracted from 5.5% to 5.1% how much has the property increased in value in Year 5 vs Year 1 (shown as a %) 3. If an amount of $1,000,000 is to be paid on June 1, 2025, what is the present value equivalent ( 2021 prices/vales, as of June 1, 2021) assuming annual inflation of 3% for the duration of the period considered and no payments between June 1, 2021 and June 1, 2025?

FINANCIAL ACCOUNTING
10th Edition
ISBN:9781259964947
Author:Libby
Publisher:Libby
Chapter1: Financial Statements And Business Decisions
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1. Assume expenses are 40% of revenue. If we trend Revenue growth at 3% per
year for 5 YEARS, AND expenses GROW at 2.5% per year for 5 years, how much
higher is the Net Operating Income in Year 5 vs Year 1 (shown as a %)
2. In the scenario described above, if over the five-year period cap rates have
contracted from 5.5% to 5.1% how much has the property increased in value in Year
5 vs Year 1 (shown as a %)
3. If an amount of $1,000,000 is to be paid on June 1, 2025, what is the present
value equivalent ( 2021 prices/vales, as of June 1, 2021) assuming annual inflation of
3% for the duration of the period considered and no payments between June 1,
2021 and June 1, 2025?
Transcribed Image Text:1. Assume expenses are 40% of revenue. If we trend Revenue growth at 3% per year for 5 YEARS, AND expenses GROW at 2.5% per year for 5 years, how much higher is the Net Operating Income in Year 5 vs Year 1 (shown as a %) 2. In the scenario described above, if over the five-year period cap rates have contracted from 5.5% to 5.1% how much has the property increased in value in Year 5 vs Year 1 (shown as a %) 3. If an amount of $1,000,000 is to be paid on June 1, 2025, what is the present value equivalent ( 2021 prices/vales, as of June 1, 2021) assuming annual inflation of 3% for the duration of the period considered and no payments between June 1, 2021 and June 1, 2025?
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