-A REIT Has an NOI of $15 as Share and

question 28

Multiple Choice

$$\begin{array} { l r } \text { Net revenue } & \$ 20,000,000 \\\text { Less: } & \\\text { Operating expenses } & 9,800,000 \\\text { Depreciation and } & \\\text { amartization } & \underline{4,400,000} \\\text { Incame fram aperations } & 5,800,000 \\\text { Less: } & \\\text { Interest expense } & \underline{1,280,000}\\\text { Net incame } &\$ \underline{4,520,000}\\\end{array}$$
-A REIT has an NOI of $15 as share and currently pays a dividend of $10 a share. The dividend is projected to increase by 4 percent by next year and continue to increase by 4 percent per year thereafter. Assuming that the blended cap rate is 9.75 percent and the required rate of return is 10.5 percent, what value would the Gordon Dividend Discount Model provide?

• A) $60.15
• B) $71.89
• C) $153.85
• D) $160.00
• E) $190.00

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Definitions:

Break-Even

Break-even point is the level of production or sales at which total revenues equal total expenses, resulting in no net loss or gain.

Fixed Costs

Fixed costs are expenses that do not change with the level of production or sales, such as rent and salaries.

Variable Costs

Costs that vary in total in direct proportion to changes in the level of activity or volume of output produced.

Constraint

A limitation or restriction that affects an organization's ability to achieve its objectives, such as limited resources or time.