Mr Tyson Is Deciding Whether to Purchase an Investment Property

question 15

Multiple Choice

Mr. Tyson is deciding whether to purchase an investment property that he estimates to have operating costs of $325,000 per year, gross potential income of $500,000, and a vacancy rate of 7.5%. A similar property with an NOI of $122,000 recently sold for $1,000,000. What is the estimated value of this building?

• A)$137,500
• B)$325,000
• C)$1,122,392
• D)$1,125,343
• E)$1,127,049

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Definitions:

Gross Profit

The financial gain obtained after subtracting the cost of goods sold from the total revenue generated from sales.

Voting Stock

Shares that give the shareholder the right to vote on company matters, such as electing directors or approving corporate policies.

Consolidations Under IFRS

The process of merging the financial results of subsidiary companies with those of the parent company according to the International Financial Reporting Standards.

Noncontrolling Interest

refers to the portion of equity in a subsidiary not held by the parent company, often reflected as a separate component of equity in the consolidated financial statements.